The Marietta Daily Journal reported today that May 2016 foreclosures continue the downward trend.
Increasing house values have brought the foreclosure wave to an end. I’m seeing new neighborhoods going up all over Kennesaw.
The paper states:
The number of foreclosures in Cobb advertsised for the May auction is down by 87 compared to this time last year, but up by 73 compared to April’s auction.
So far this year, there have 769 properties advertised for foreclosure in the county. By this time last year 1042 properties had been advertised.
In my bankruptcy practice, I have also noticed a downward trend in foreclosures. The biggest factor in this trend is the rising property values.
I recently had a Chapter 7 debtor who was willing to surrender their house to the bank because they were so far behind on the mortgage payments. I encouraged them to put the house up for sale to see if they could get enough to cover the loan and walk away with a little cash in their pocket (in Georgia, a married couple can exempt $43,000.00 in equity and a single person can exempt $21,500.00). To their surprise, they actually got a contract on the house.
Two years ago, this would have been impossible because the real estate market was so bad.
How long will the downward trend in foreclosures continue?
I think it will hold steady because second mortgage holders are waiting in the background.
Currently, I see a lot of debtors who can afford to remain current on their first mortgage but have not been able to pay the second mortgage in years. The second mortgage holders have not been able to foreclosure because they would have to pay off the first mortgage holder before they could received any money from a foreclosure sale. Since house values have been so low, it just has not made sense for a second mortgage holder to foreclose.
- As house values continue to rise, second mortgage holders are going to be more tempted to start foreclosure proceedings. For this reason, I believe that foreclosure numbers will hold steady.
If house values ever get high enough, debtors may be able to sell their houses to pay off first and second mortgage holders so that they can avoid foreclosure altogether. With our current sluggish economy, I don’t see this happening in the near future.