According to an article in the New York Times dated June 19, 2011, it will take lenders, in the state of New York, 62 years to repossess the 213,000 houses currently in default in the foreclosure process. That pace is the slowest in the nation. New Jersey has the second slowest pace of dealing with foreclosures, and they are projected to be done in 49 years.
Why does it take these states so long to process a home foreclosure? These two states handle all of their foreclosures through the courts. In the 27 states that do not use the court system, the process is much faster.
Several factors are causing the slowdown in the processing of foreclosures, even in states where they do not use the court system. First, the robo-signing controversy has slowed the foreclosure process for many lenders and investment bankers. They now have to be sure their paperwork is correct, or they stand a chance of losing the house altogether.
Secondly, the glut of foreclosures has driven the auction prices down. Foreclosure homes are priced low, which is bringing the overall market value of homes down. Mortgage companies may attempt to keep foreclosures off the market to stabilize the value of other loans. Allowing a defaulted homeowner to remain in the home is more attractive than selling it for pennies on the dollar and driving the prices of the rest of your portfolio down.
Finally, once a lender sells off a foreclosure, if there is a loss, it reflects against the overall balance sheet of the lending company. Property taxing authorities will not catch up with the loss in value of the homes in a housing crisis or recession because it is primarily how they finance their budget.
When property values drastically drop, so does the taxing authority’s income. Therefore, they try to hold the value of property by artificially inflating the data and fighting with taxpayers about the value of their property.
Lenders have historically used the taxing authority’s values for justifying tax audits of their inventory and net worth. The net worth on a balance sheet creates opportunities for leverage and growth. Lenders and investment banks are reluctant to take a loss on foreclosures.
Foreclosures in the housing crisis are creating havoc. Not only are millions of Americans facing bankruptcy because of foreclosures on their property, the lenders themselves are close to bankruptcy. Eventually, the 2.9 million foreclosure notices handed out in 2010 will have to be dealt with, it is just a matter of time.
Are you facing a home foreclosure? Do you need help from a bankruptcy lawyer? If you need relief from the stress of debt and you live in or around the metropolitan area of New York City, New York, contact us at www.betterbankruptcy.com .We will help you find a bankruptcy attorney in your area who will answer your bankruptcy questions.
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