With real estate prices on the rise across Wake County and the region of the Research Triangle of Raleigh-Cary-Durham, mortgage lenders and banks that have been carrying so-called ‘shadow inventory’ since the end of the Great Recession have ramped up their foreclosures.
What is the Shadow Foreclosure Inventory?
Shadow foreclosure Inventory is defined as the number of properties in the foreclosure process or in serious delinquency status. Generally speaking, when a homeowner has missed three or more payments, either consecutivley, or cumulativelyt hey are considered to be seriously delinquent and at risk of foreclosure.
According to the latest CoreLogic MarketPulse Report; The foreclosure rate is back to its “pre-crisis” level with judicial states continuing to have higher foreclosure & serious delinquency rates, refinancing among rising rates shows homeowners are more likely to choose cash-out and longer term and highlights from their Home Price Index. CoreLogic’s MarketPulse provides monthly insight…Read More
What are Judicial Foreclosures?
Foreclosure is the process where a home is sold to pay off an unpaid debt. That debt is generally a first mortgage, but it can also be second mortgages, unpaid taxes or liens, and in North Carolina, Homeowners Associations also have the power to foreclose.
A mountain couple says they faced a nightmare after learning about a little known law that meant they could lose their home. In the state of North Carolina homeowner’s associations have the right to …
Generally speaking, foreclosures happen when a homeowner falls behind on payments which are associated with the home and have a security interest in said home. In certain states, foreclosures are always judicial, which means they go through the court system. New York and New Jersey are the most well-known of the judicial foreclosure process states and it can take years for a foreclosures to work its way through the courts. But that’s not the case in North Carolina where borrowers give their lender a Deed of Trust when they borrow against their home.
What is a Deed of Trust?
Unlike a mortgage that simply gives the mortgage lender a security interest in the home being mortgaged, the Deed of Trust in North Carolina is an actual DEED given to the bank by the property owner which is held in TRUST with an attorney selected by the lender. Once a borrower falls behind on one or more of their payments, the lender simply needs to file a Hearing for Cause at the Special Proceedings division of the Clerk of Superior Court in the county where the property is located.
If the homeowner cannot prove they are not in default or convince the magistrate that they can either a.) get current or b.) payoff the debt in a reasonable period then the bank will be granted a sale date, generally 20 – 40 days from that hearing date. In some cases, the magistrate may be convinced to postpone the hearing to a future date or the lender may offer to postpone the sale if they feel the borrower is demonstrating good faith to resolve the delinquency.
A recent review of foreclosure activity in Wake County revealed that there are more than 90 homes that have already been scheduled to be auctioned through the foreclosures process for the month of September with October trending in the same direction. Although that is no surprise because banks don’t like to take properties back through the foreclosure process in December because it doesn’t make for good media when you take someone’s home at Christmastime.
Why are foreclosures spiking?
If the economy is charging ahead at full steam, why are foreclosures on the rise?
While there is no reliable data that can answer this question, my theory is simple. Banks which had been hesitant to foreclose seriously past due homeowners now see home prices in Wake County and the region rising in value three times faster than rent. As a result, banks are less willing to provide homeowners with work-outs because they are feeling confident that they should be able to sell the home for at least what is owed, and in some cases actually make a profit!
Seriously past due homeowners who in some cases haven’t made a mortgage payment in years are suddenly finding themselves with less than thirty days to vacate their homes.
Dallas Federal Reserve Bank President Robert Kaplan on the state of the U.S. job market and economy, the outlook for Federal Reserve policy and the potential impact of trade tensions.
What can past due homeowners do to prevent foreclosures?
Check back for my next post titled; “I’ve received a Notice of Foreclosure; What Now?”