Home »
Blog » Fixer Upper Homes » Distressed Properties » Unemployment May Trigger REO Property to Rise Again
Unemployment May Trigger REO Property to Rise Again
June 22nd, 2009 by 
Joseph Smith
Last month’s decline in the number of REO property in Massachusetts has prompted industry experts to suggest that more and more people have realized how costly foreclosure proceedings are and have taken steps to avoid repossession of their homes.
However, the climbing unemployment rate is causing concern among industry experts who feared that many people who lost their jobs may soon have difficulty making their mortgage payments, thus pushing the number of REO property to rise again.
In May, 582 foreclosure actions were reported, representing a decline of 58.6 percent from the 1,405 recorded during the same month last year. Last month’s figures were 24.3 percent lower from the previous month.
Statewide, foreclosure deeds recorded were down in numbers by 26.3 percent or 4,110 from 5,576 for the same period a year ago. Industry experts noted that last month’s recorded numbers of foreclosure deeds were the lowest since the April 2007 figures.
But with the growing rate of unemployment in Massachusetts, industry experts fear that those who lost their jobs will struggle with their monthly mortgage payments and push foreclosures to rise again.
Still, other industry experts attributed the decline in the number of REO property to the Massachusetts Land Court’s decision in March which invalidated two foreclosure actions because lenders involved failed to provide proof that they were the true holders of the titles to the distressed properties.
The Massachusetts Land Court’s decision had caused concerns to ripple throughout the real estate industry and prompted some lenders and banks to stall sales of repossessed homes.
Director of litigation at Harvard Law School’s WilmerHale Legal Services Center Paul Collier noted that some title companies are hesitating at insuring property titles in repossession sales because of pending litigations.
He explained that many homebuyers are having difficulty getting financing because lending institutions could not provide titles to foreclosure sales. He added that some lenders who want to hold foreclosure auctions could not attract buyers at those events.
Meanwhile, petitions for foreclosure increased significantly last month, in sharp contrast to the decline in the number of foreclosure deeds. The 2,329 filings of foreclosure petitions were almost six times higher than the 390 petitions recorded for the same period the previous year.
Harvard University’s Joint Center for Housing Studies director Nicolas Retsinas pointed out that whatever is the reason for the decline in the number of REO property, the fact remains that foreclosure is not yet over.
