For homeowners in Washington, D.C., Maryland and dozens of other jurisdictions, it’s getting harder and harder to lose a home to foreclosure — even if the owner has not made any mortgage payments.
That is what Jeffrey Fisher has noticed in his 38 years as a foreclosure attorney for banks in the Washington area. At the height of the housing crisis, he was selling about 40 foreclosed properties a month in the District, he said, but business has slowed to a trickle. In fact, he has sold only three foreclosed housing properties in the city since the Saving D.C. Homes from Foreclosure Act went into effect a few years ago.
For some, the virtual freeze on foreclosures is a good policy that helps struggling homeowners stay put in the wake of the worst economic downturn since the Great Depression. But many real estate professionals are concerned that delaying the inevitable has slowed the housing market’s healing process and could backfire when those inevitable foreclosures hit the market.
On average, it takes more than 1,000 days to foreclose on a home in the District and 531 days in Maryland, according to RealtyTrac. The national average is 414 days.
“The bottom line is, D.C. is shut down for foreclosures,” said Mr. Fisher, principal of The Fisher Law Group PLLC in Upper Marlboro. “There’s a real evil when the process takes too long. Perhaps the owner of the property wanted that foreclosure to go through so he could get a fresh start, perhaps he’s moved out, perhaps the neighbors are having to deal with a foreclosed house sitting vacant next to them with the grass growing.”
Inside the Beltway, the real estate market in Virginia — where the average time to foreclose is one-tenth of what it is in the District, is primed to rebound this year, but a “backlog of foreclosures” in Maryland and the District could add uncertainty to the market and keep down home values.
Virginia’s real estate market took a beating during the housing crisis. Foreclosure numbers were high, and many families lost their homes. But the market now appears ready to move on.
Homeowners in Maryland and the District have a long way to go before they recover lost ground and housing values from the Great Recession. Foreclosure rates were kept artificially low by local governments, but their policies could come back to haunt them.
Delaying the inevitable
Foreclosures litter the housing market with cheaper homes, which in turn drag down the values of neighboring properties. If a buyer can snatch a foreclosure for half the price, why pay more?
“We’re starting to see the consequences of kicking the can down the road when it comes to foreclosures,” said Daren Blomquist, vice president at RealtyTrac. “While it may have helped some people avoid foreclosures, for many it just delayed the inevitable, and now we’re seeing those foreclosures start to come through the pipeline, which is going to be bad for the housing market.”
For some homebuyers and real estate investors, however, the dynamic can be positive.
“The combination of lower housing prices and incredibly low interest rates will make it a great environment for buyers in the foreseeable future,” said Bruce Whitehurst, president and CEO of the Virginia Bankers Association. “It’s painful for anybody who has a home that’s not worth what they bought it for, but there’s no question it’s a good time for buyers.”
The rate of foreclosures nationwide has declined from its peak in 2009 and 2010. According to CoreLogic’s National Foreclosure Report, the number of foreclosures ticked down 3 percent to 56,000 in December compared with the previous month and fell 21 percent compared with December 2011. That is still a far cry from the average of 21,000 foreclosures per month before the housing crisis began.
RealtyTrac’s 2012 annual survey counted foreclosure filings on 1.8 million properties in 2012, down 3 percent from 2011 and more than 36 percent below the 2010 peak of 2.9 million properties.View Entire Story
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Tim Devaney is a national reporter who covers business and international trade for The Washington Times. Previously, he worked for the Detroit News, Grand Rapids Press, Portland Press Herald and Bangor Daily News. Tim can be reached at email@example.com.
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