State of Housing Market Worse Than Reported?
If the current state of the housing market were a book, its title might be something like, ‘There Goes the Neighborhood.’
Every day, the headlines proclaim the sorry state of the housing crisis. More troubling is it could be far worse that what’s already being revealed by government and industry statistics.Â
Mark Zandi, chief economist for Economy.com, contends many lenders may be distorting foreclosure rates by allowing delinquent homeowners to remain in their homes long after they have defaulted on their mortgages.
According to Zandi, some lenders are reluctant to initiate foreclosure procedures on homeowners because of cost and time factors. Legal fees and maintaining a vacant property while paying insurance and taxes can be expensive. The legal process itself can take months, during which time the lender is responsible for the home’s upkeep.
“Some people stay in their houses until someone comes to kick them out,” said Angel Gutierrez, owner of Dallas-based Metro Lending. “Sometimes no one comes to kick them out.”
At some point, however, the inevitable must happen. And prolonging the process may only make matters worse, creating a flood of foreclosed homes in an already debilitated housing market.
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