Great news for people interested in finding and buying foreclosed homes at great prices. The latest study of mortgage loan data conducted by the Office of the Comptroller of the Currency (the OCC) came out of Washington, D.C. It showed new foreclosures jumped 21.1% ahead of the last quarter.
That's a healthy increase in the number of foreclosures in process as 2011 heads toward its conclusion. And it means more foreclosed home will be entering the inventory as foreclosures listings for sale in 2012.
More inventory of bank owned and government owned homes means prices should continue to remain stable or even fall as the market attempts to clear out more listings. That's terrific news for buyers, if not great news for banks and other home sellers.
Even more encouraging is the mix of loan quality we're seeing in foreclosures in process. 46% of foreclosures are on Prime loans. Prime loans were granted to buyers with original credit scores above 660. These buyers typically purchased homes that are above average in original price and features. Prime home foreclosures could offer some of the greatest value for dollar at newer, lower prices in 2012.
18% of foreclosures in process are from Alt-A loans, made to people with credit scores in the 620 - 659 range. Subprime loans now in process of foreclosure represent 22% of all current foreclosures. Alt-A and Subprime home loans may offer some of the greatest price reductions and lowest current for sale prices in the foreclosure market today.
This increase in foreclosure activity is reported to be driven by lenders working through the end of the foreclosures that were stalled last year in the "robo-signing" scandal. We reported on the foreclosure freeze last October, and noted that shadow inventory pressure would build as a result. This has now played out as we expected.
Over time, some bad transactions were discovered, but overall, banks and government loan agencies have found a large pending inventory of foreclosures is now ready to be brought forward to the market.BANK REO'S Fannie Mae foreclosures, Freddie Mac foreclosures and HUD HOMES are all entering the market to compete for buyers looking for a deal on a foreclosed home.
Foreclosures in 2012 are shaping up to give sharp buyers more selection and better, lower prices. We'll continue to keep an eye on market developments, as RealtyStore.com members will surely help shape the future with searches and purchases of foreclosed homes across the U.S.