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Welcome to ‘housing purgatory’

By Jay MacDonald · Bankrate.com
Monday, March 28, 2011
Posted: 9 am ET

I blinked twice at the figure: 638 days. That's the average time it takes from an initial missed mortgage payment for the bank to complete foreclosure proceedings and change the locks here in Florida, the Foreclosure State. Nearly two years of free rent. Then, of course, the boot.

We don't top the latest list of laggards compiled by LPS Applied Analytics, which tracks 40 million mortgages nationally; that honor went to New York at 664 days. But five Florida metropolitan areas, including Cape Coral-Fort Myers (675), Miami-Fort Lauderdale (672) and Destin-Fort Walton Beach (667) exceeded the Empire State's average for foot-dragging, hem-hawing and maypole-dancing.

In the 27 states that allow foreclosures to bypass the courts altogether, the averages range from 392 days in Arizona to 511 days in California, both of which have more foreclosures than snowbirds these days.

If you're a homeowner facing the possibility of foreclosure, these numbers may offer some relief. Two years, give or take, is a long time between nonpayment and eviction, perhaps long enough for circumstances (a job), fate (an inheritance) or that near-mythical beast the mortgage modification to save your home.

But for the rest of us homeowners fretting over our plunging property values, as well as frazzled real estate agents who now use a calendar instead of an egg timer to mark their listing's days on market, these are heartbreaking numbers.

In fact, with 2.2 million mortgages now delinquent by 90 days or more, you might as well go ahead and order HBO and Showtime because this tear-jerker is going to run awhile.

University of Central Florida economist Sean Snaith offers an apt term for it: "housing purgatory."

Things could always turn around. Home sales have stirred in some areas this spring. A little interest rate hike might serve to resuscitate the flatlined market and give us better-than-Vegas odds of actually clearing our note when we sell our homes.

But what has Realtors and lenders alike chewing their erasers is the prospect that those 2.2 million incipient foreclosures could set off another downward price spiral.

Until we know which way this mortgage pendulum will swing, to quote Bob Dylan, we're all "stuck inside of Mobile with the Memphis blues again."

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6 Comments
jm
May 20, 2011 at 1:14 pm

We should get the laws that force a tax on early withdrawal of IRA and 401k accounts, repealed. That way some folks could take money out and pay off their mortgages. Then some homes would be paid for and could be bought and sold cleanly, restoring some sanithy to the market.

Stephen
April 05, 2011 at 7:44 am

Those who took advantage of the government's "$8,000 tax credit" have already lost it as housing values continue to plunge. If you really want to lose wealth, just accept some screwball government plan because when it comes to losing money, they're the undisputed kings! This collapse is nowhere near the bottom with at least one more year to go, probably two or three. Smart people will wait this thing out and get a fantastic deal on a great home! Remember, it's the fool who rushes in.

Mary
March 30, 2011 at 3:11 am

It really baffles me when I read about the industry (and the press) talking about "recovery" for the housing market, which, when they use the term, means prices going up again. Isn't it clear yet that the whole housing bubble thing was disasterously unhealthy for the economy? Sure, a small portion of the population made scads of money for a time, but as it became increasingly impossible for the average-incomed person (and then even the above average-incomed) to buy a home, all that fairy-tale financing had to be invented (and marketed and pushed) so that the industry could sell what had been built, and the delusional money-making orgy could go on and on. The way I see it, this slide back to reality IS the recovery of the housing market. My father bought a 3 bedroom, 2 bath ranch on a third-acre of land, on Long Island in 1963 for $19,500. Now, I'm not saying everything should forever stay the same, but who in their right mind has not wondered how the market could support a 2 bedroom condo going for nearly half a million. The answer is - it couldn't. And it won't be able to in the future, either.

Alice
March 30, 2011 at 12:48 am

I shed no tear for the realtors and the banks. They were part of the creation of the housing debacle.

Now they want to make money on the downside of the housing crisis like ambulance chasers waiting for the next dead body.

Now let's look at the Hamp program of Mr. Obama--------that program has failed to stop foreclosures. Here is why----the human element has been taken out of the decision making process.

The parameter------the amount at which a homeowner's property is considered for MHA/Hamp program is based on a set number of about $729,000.00 at which and below which a homeowner's mortgage may be considered for permanent modification.

In the Metro area of Washington, D.C. this "set point", control point, prevents mortgage companies from permanently writing down loans---------why, because, the price of houses is much greater in the D.C. Metro area than in many othcer areas of the nation.

Congress is right to kill this program that has worked for few Americans. This is an artificial set point which serves only to re-distribute homes above that set point=======homes that will be foreclosed upon in the Metro area.

Mr. Obama can veto the bill to get rid of the MHA program-----however, in doing so he will only perpetrate the continuation of a program that is requiring numerous hours of work for the banks and for the homeowners who must constantly file papers to the bank.

This 'program' is just that a program with no realistic method for preventing foreclosures-------instead it is pushing many homes into foreclosure as submissions are routinely denied by the big banks based on Mr. Obama's designation of the approximate $ amount at which a homeowner may have their home considered for the MHA program.

Just consider this a small introduction ot my coming book----shall we call it "Alice's Adventurein Foreclosure Land? Being just a little glib here.

Regular Gy
March 29, 2011 at 11:50 am

The more the government meddles with the free market, the longer it is gong to take for housing to recover. All the foreclosures could have been wiped off the books and sold last year if not for the "foreclosure freeze" mandated by Big Brother.
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Now, the banks are carrying these bad loans for years at a time, causing perspective buyers to wait for the 'bottom' and extending the housing crisis.
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The market is capable of correction, all we have to do is allow it.