Increasing Foreclosures Torment Housing Market

October 13 00:00 2011

New York, October 13 ( – The US housing market is reeling under a spate of foreclosures. The number of homes entering the foreclosure process is increasing and they are taking even longer to get sold or repossessed by lenders. There has been a 14 percent rise in the number of US homes that were served with first-time default notice during the third quarter compared to the second quarter, according to RealtyTrac Inc.

This escalation sends out clear signals that banks have become more aggressive in dealing with borrowers who have fallen behind on their mortgage payments. These defaulting borrowers could face foreclosures sooner. The increase in foreclosures could also be an indication of a potentially faster turnaround for the U.S. housing market. However, it does not necessarily mean that revival will occur soon unless the number of potential foreclosures comes down.

RealtyTrac said that the increase in initial defaults in the third quarter was the result of a spike in August. In September, the default notices were down 10 percent from August. However, the increase in initial defaults in the third quarter was the first increase after five consecutive quarterly declines. This indicates that banks are gradually addressing their backlog of homes in foreclosure and are getting active in moving on more recent home loan defaults.