On Foreclosures and Fiscal Cliffs
by Henry Meier
It takes a big blogger to admit when he’s wrong and it appears that this blogger may have been wrong when he predicted that the $26 billion robo signing settlement with major banks combined with new requirements being placed on lawyers in New York State to affirm the accuracy of foreclosure papers would lead to a glut of foreclosures. So far, the dam has not broken. As Bloomberg News reports this morning, the number of properties for sale has shrunk to its lowest level in a decade and housing prices nationally are rising at a healthy pace.
Meanwhile in New York, a report released by the State’s Office of Court Administration indicates that the number of foreclosures in New York has risen in 2012, but will not reach the State’s peak set during 2009-2010. As a result, foreclosure actions continue to represent a significant percentage of the State’s overall caseload, but it appears to be manageable. One interesting note: it appears that banks are still having trouble complying with the State’s new affirmation requirements so there still is a large number of shadow foreclosures taking place, those in which the actions have been commenced but no judicial intervention has been requested.
Not surprisingly, if Congress and the President cannot agree on a deficit reduction plan, sending the Country over the dreaded fiscal cliff, the Wall Street Journal points out that this would have an impact on the number of foreclosures being carried out. The paper points out that one of the reasons foreclosures have declined is that banks have more aggressively turned to short sales, loan modifications and principal reductions as an alternative to more lengthy litigation, but unless Congress agrees by early January federal law exempting income saved on these modifications from a homeowner’s income tax will expire.