Out of the frying pan andâ€¦
Bank of America just became the first bank to suspend foreclosure sales across all 50 states.Â This follows news that JP Morgan Chase and GMAC would self impose eviction moratoriums and REO sales in 23 states. The next step is a nationwide freeze on foreclosure sales and new evictions by all servicers.
On their Website: â€œBank of America has extended our review of foreclosure documents to all fifty states. We will stop foreclosure sales until our assessment has been satisfactorily completed. Our ongoing assessment shows the basis for foreclosure decisions is accurate. We continue to serve the interests of our customers, investors and communities. Providing solutions for distressed homeowners remains our primary focus.â€
These legal actions only serve to further delay the inevitable. Ultimately these foreclosed properties will hit the market some six to twelve months from now and further add to the inventory of unsold homes on the market. Our sluggish economy is in no shape to absorb a sudden flood of foreclosed properties.Â Delaying the disposition of REO inventory slows the home price recovery process.
Considering Bank of America just left the wholesale brokerage industry Tuesday totally unannounced, meaning mortgage brokers can no longer use B of A direct, these are telling signs of what is going on within the institution. As far as the real estate market, this makes it obvious that these proceedings represent the proverbial nail in the coffin to insure further a slow recovery and housing price declines. Until these issues are resolved, the housing industry will continue to limp along at a snail's pace, suffering from an overhang of shadow inventory and the looming threat of a downward spiral in home prices.
In Laymenâ€™s terms â€œWe need more buyers!â€