bank owned open houseThe past few months have seen many conflicting reports about the status of the national REO market. Most states have seen the numbers of foreclosures drop considerably since even a year ago; the most recent reports from California in particular show Fannie Mae foreclosures barely a quarter of what they were in 2011. Nevertheless, “shadow foreclosures” remain hidden from view, particularly in judicial foreclosure states like Florida. Other states are moving ahead now as well.

Here’s a new report from Florida, and another from Maryland. And here’s another still from Oregon, which illustrates how the REO landscape has evolved on the West Coast:

The mediation program that took legal effect Aug. 4 requires lenders to meet with borrowers in mediation before foreclosing. It also allows homeowners not in foreclosure, but who have missed payments or suffered a financial setback, to request mediation with their mortgage servicer.

In July 2012, when the program first took effect, foreclosures nearly came to a complete stop as lenders considered its legal implications.

Later that month, a court ruling against lenders led most to begin filing foreclosures in courts, rather than through administrative notice-and-file system that had been the norm since the 1950s.

That also bypasses the mediation program, which applied only to out-of-court foreclosures.

Earlier this year, the Oregon Supreme Court eased back on that ruling in a decision the banking industry said would allow it to return to out-of-court foreclosures. In July, however, the vast majority of foreclosures were still proceeding in court.

In short, the regulatory standards that have reshaped the REO market nationwide are beginning to enter their next phase. Sellers are taking great caution with these distressed properties and their owners; in any case, many of these homes will make it to market in 2013-14.

Contact me today to learn more about the evolving REO marketplace, and how to make the most of these assets as a buyer or seller.

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