So how much of a delay in foreclosures is the robo-signing fracas causing?
Freddie Mac, the now essentially taxpayer owned company that with Fannie Mae, finances or guarantees about half of all U.S. mortgages, told the Financial Times on October 25 that its now taking as long as eight months for a house to work it’s way through the foreclosure process. That process took about two months before the start of the mortgage crisis.
The delay comes because borrowers and judges are challenging bank attempts to foreclose at every stop of the way now that the robo-signing scandal has shown that many banks don’t have the paper work they need to foreclose or at least haven’t properly certified that they do. (Robo signers, bank officials checking over the paperwork for a foreclosure, it turns out certified the completeness and accuracy of thousands of foreclosure packages without actually reading the documents.) The judges ruling on foreclosures are throwing an increasing percentage of foreclosures back to banks for refilling too.
The result is that while before the mortgage crisis many people moved out of their homes upon receiving a foreclosure notice, now many are staying in those houses until the sheriff evicts them.
Freddie Mac and Fannie Mae currently sit on move than 190,000 foreclosed properties.
The delay in the foreclosure process is costing banks money (Do I hear sobbing among my readers? Thought not.) and stretching out the time it will take the housing market to clear the current inventory of homes and further depressing the prices of existing homes.