The simple reason is that servicers are not initiating or processing foreclosures at the pace they could be.11% of Californians are delinquent with their mortgages, but the number of actual court filings is down over last year. Not likely.
By postponing the date at which they lock in losses, banks and other investors positioned themselves to benefit from the slow mending of the real estate market. But now industry executives are questioning whether delaying foreclosures — a strategy contrary to the industry adage that "the first loss is the best loss" — is about to backfire. With home prices expected to fall as much as 10% further, the refusal to foreclose quickly on and sell distressed homes at inventory-clearing prices may be contributing to the stall of the overall market seen in July sales data. It also may increase the likelihood of more strategic defaults.
Too bad regulators are doing their job - making banks clean up the mess on their balance sheets.
Oh, but then the delay in foreclosure was MANDATED by the government. What a surprise, more screwing around with free markets.
With the exception of a spike in foreclosure activity that peaked in early-to-mid 2009, after various industry and government moratoriums ended and the Treasury Department released guidelines for the Home Affordable Modification Program, no stage of the process has returned to pre-September 2008 levels.The delaying tactic is probably running out of steam. Look for more hand-wringing. Look for more interference in the market. In short, look for bigger government. [hat tip to Calculated Risk]