Foreclosure Conversion Grows
The graph below shows the continuing trend of banks pushing through to a final foreclosure sale. In the past, roughly 10 to 15% of lis pendens that were filed on a property resulted in a foreclosure sale.
The homeowner was usually able to find an alternate solution to foreclosure, such as getting current on the loan, selling the home through normal market conditions, selling short, or surrendering the property to the bank in what is referred to as “deed in lieu of foreclosure.”
But times have changed. The blue line on the graph below shows that the ratio of foreclosure sales to lis pendens filings is about to reach 60%, though part of the high report is “a math thing,” because the denominator is dropping as fast as the numerator is rising. Regardless, more lis pendens filings are ending up as foreclosure sales today than ever before.
The trend of new filings continues to drop (green bars) and the trend of foreclosure sales has actually started to drop as well, though foreclosure sales (red bars) were halted by the courts (and some poor decision making by the banks) and I suspect we will see the foreclosure sales begin to rise again before the end of the summer.
2011 is the Year of the Foreclosure, and if we see a spike in sales activity, we might be able to consider this the worst year as we head into a full market recovery. The biggest variable will be the speed in which lenders are able to ramp-up the processing of stalled files.