10 November 2011 19:47 [Source: ICIS news]
RealtyTrac, an online research and marketing firm that specialises in foreclosed residential properties, said that bank default notices, repossessions and auctions of repossessed homes all increased last month compared with September.
The company said that more than 230,000
Foreclosures began to revive in the third quarter this year, ending what had been three successive quarters of declining activity.
The October increase in foreclosures was said to reflect a renewed pace of activity by mortgage lenders now that foreclosure processing problems that arose a year ago apparently have been remedied.
Beginning in October 2010, major mortgage banks essentially halted foreclosure actions when it was revealed that many of them lacked proper documentation, were signed by unauthorised officials or were not recorded as required under state laws.
The discovery came to be known as the “robo-signing” scandal and forced banks – often under legal pressure from state government officials and prosecutors – to halt or sharply reduce their foreclosure operations until their procedures were reformed and staffs increased.
But that year-long hiatus in foreclosure processing apparently has come to an end, and banks are once more moving briskly to recover properties involved in non-performing mortgage loans.
“The October foreclosure numbers continue to show strong signs that foreclosure activity is coming out of the rain delay we’ve been in for the past year as lenders corrected foreclosure paperwork and processing problems,” said RealtyTrac chief executive James Saccacio.
This means that more foreclosed residential properties will be flooding into the already depressed US housing market, adding still more homes to the inventory of residences for sale.
That in turn will put additional downward pressure on home prices and make it all the more difficult for new housing contractors to get development loans or to make a profit on homes they do build.
The housing market is a key downstream consumer sector for the chemicals industry, driving demand for a wide variety of chemicals, resins and derivative products such as plastic pipe, insulation, paints and coatings, adhesives and synthetic fibres, among many others.
The American Chemistry Council (ACC) estimates that each new home built represents some $15,000 (€11,100) worth of chemicals and derivatives used in the structure or in production of component materials.
In addition, the time it can take for foreclosure processing to be completed – which in some states can be up to three years – means that the renewing flood of foreclosed properties could linger on the market for years to come, pushing a hoped-for housing recovery back still further.
Saccacio also indicated that regulators may prolong the foreclosure crisis.
“Recent state court rulings and new state laws keep changing the rules of the foreclosure game on the fly,” he said, “creating more uncertainty in the housing market and threatening to prolong the road to a robust real estate recovery.”
($1 = €0.74)
Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy
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