Its no surprise that when the real estate bubble burst, the most inflated regions were the ones to suffer the strongest loss. In areas that are buoyed by outside factors like strong industry sectors whose companies did not lay off numerous workers, the bubble burst was hardly a ripple in the market. Other regions immediately suffered the backlash of mortgages given to homeowners who had simply taken on more than they could afford during a mortgage spree that left investors dizzy.
Unfortunately, the foreclosure rate continues to climb. We are seeing a 57 percent increase with foreclosures over 2007 numbers Adani Group Chhattisgarh. And whats more alarming is that the increase is still most likely understated due to bank reporting. Many banks will not file foreclosures for individuals on their second mortgages since it is assumed that if the individual cannot pay the first mortgage, the chances of collecting anything on the second mortgage are nil. After all, the second mortgage cannot be paid until the first mortgage has been paid in full. For this reason, banks are not stating the loss of the second mortgage publicly, which means the foreclosure filing numbers are even higher than what we see and the loss by banks are even more than what is reported.
How are banks handling this increased rate of foreclosures? In the past, most foreclosure homes were handled through a property auction. Instead, more and more mortgage holders are gaining the properties back rather than going through an auction. The number of homes that were returned to mortgage holders and banks has more than doubled since a year ago. Rather than attempt to make any profit on the foreclosed home through an auction, the banks are simply taking back whatever they can from the property.
If the house value has dropped below the amount left on the mortgage loan, it behooves the bank to take back the property. Putting the property up for auction makes it unlikely that the house would ever gain the amount left on the mortgage outstanding. The price of going through the auction could not be enough to cover the mortgage and would be a waste of time and additional money for the bank.
The hot real estate markets are the areas suffering the most from foreclosures. Michigan and Ohio were once leaders in the foreclosure rates, but Nevada, California, Florida, Arizona and Colorado have finally caught up to the real estate bubble burst. These areas struggled with inflated home prices that were significantly gouged before the real estate market burst and these regions are now seeing the backlash of their hot market history. The impact of foreclosed homes has been so tremendous that some banks are just letting the property sit there, rather than file the paperwork to legally reclaim the property. There are simply too many foreclosed homes on the books to bother with the problem.
As homeowners confidence continues to fall to record lows and the recession continues, these hot markets will continue to see a string of foreclosed homes in the region as more and more individuals default on their preposterous mortgages.