In case you were wondering how things were going on the housing front, the news still doesn’t look too hot.
Aside from homes sales data being revised, downward, the foreclosure glut appears to be nastier than ever.
Fitch Ratings, which rates the creditworthiness of banks and other companies, called the “supply of REO staggering” in a news release sent out this week.
They attributed the backlog to pending investigations regarding shoddy foreclosure processes employed by banks and lenders.
We’ve known about the robosigning allegations for a while, and the unfortunate consequence (aside from people losing their homes unjustly) has been further delays to a potential recovery.
It’s a bit of a catch-22. Clearly we can’t have these companies going around and rushing people out their homes without doing their due diligence. But the delays are also creating more weakness in the housing market.
REO Sales Key to Recovery
Fitch believes these REO sales will be key to determine the direction of the housing market over the next couple years.
The FHFA, which oversees Fannie Mae and Freddie Mac, owns about half of the nation’s distressed residential real estate. But they’ve yet to decide on how to unload it all.
Fitch expects the FHFA to introduce a program that will allow for measured sales to investors who will hold and rent out the properties for some specified term.
This should protect the flagging real estate market from more harm, as they wouldn’t be rapidly unloading their inventory and putting even more downward pressure on home prices.
New Foreclosure Waves
Meanwhile, RealtyTrac released a report today warning that new “foreclosure waves” are on the way.
Despite a seasonal slowdown, a trend that they’ve seen over the past four years, November’s numbers point to more doom and gloom ahead, likely early next year.
Foreclosed properties scheduled for auction hit a nine-month high in November thanks to a default surge in August, and many new defaults that started the foreclosure process over the past few months will be sent to auction soon.
In other words, don’t expect a housing recovery in 2012 either…but expect mortgage interest rates to remain low as the carnage continues (there’s your silver lining).
So it looks like there’s still a ton of heat on home prices, what with the growing distressed property inventory and misleading sales figures due to come out next week. Not to mention high unemployment and uncertainty in Europe still festering.
Read more: Should you buy a house now or wait?