Banks are still holding on to scores of delinquent mortgages that date to the real estate crash, but a surge in home values across the country is motivating them to more quickly move the most troublesome loans off their books.
Over roughly the past year, banks have been ratcheting up repossessions of foreclosed homes to the highest level in four years, according to the data firm RealtyTrac. Banks repossessed a total of 449,900 homes in 2015, up 38% from a year earlier, as they aim to capitalize on improving economic conditions and finally push their most seriously delinquent loans through to foreclosure.
Matt Weidner, a plaintiff’s attorney in St. Petersburg, Fla., said he has recently seen an increase in bank repossessions despite pleas from both servicers and borrowers to have judges cancel foreclosure sales.
“Servicers are experiencing real conflict because they are sending their attorneys into court every single day begging courts to cancel [foreclosure] sales only to be told by judges to clear the foreclosure cases,” Weidner said. “Banks are taking homes back in numbers that aren’t rational.”
RealtyTrac’s Blomquist suspects that repossessions are on the rise because banks are under pressure from municipalities and state governments to deal with so-called vacant “zombie” properties in which a mortgage servicers starts, but does not complete, a foreclosure. In New York, Attorney General Eric Schneiderman proposed legislation last year to take back vacant and abandoned homes that have not been maintained because of drawn-out foreclosure proceedings.