Last year, several of the country’s largest mortgage servicers — Bank of America, GMAC/Ally, JPMorgan Chase, among others — were forced to hit the pause button on foreclosure procedures after it was revealed that many foreclosure documents were being rubber stamped by untrained, ill-informed “robo-signers.” This delay caused a bottleneck of foreclosure-worthy properties waiting to be reviewed. But now it looks like those homes are starting to trickle out into what could be a flood in early 2012.
According to the folks at RealtyTrac, “Notices of Default,” the first stage of the foreclosure process, rose 33 percent month-to-month in August. So, barring an encore of the robo-signing scandal, these properties will hit the market during the first few months of next year.
“The big increase in new foreclosure actions may be a signal that lenders are starting to push through some of the foreclosures delayed by robo-signing and other documentation problems,” said James Saccacio, chief executive officer of RealtyTrac. “It also foreshadows more bank repossessions in the coming months as these new foreclosures make their way through the process.”
Bank of America tells CNBC’s Realty Check about its recent surge in foreclosure actions, “We are on an ongoing path to return foreclosures to normal levels. Strong gains like that from July to August demonstrate our progress – primarily in judicial states — clearing more volume to advance to foreclosure once we pass the numerous quality controls we have in place and exhaust all options with homeowners. Our progress each month builds upon foreclosure levels lower than the market realities would dictate.”
While this may be good news for potential home-buyers looking for a bargain, it seems likely that the glut of foreclosed properties will not be welcomed by homeowners looking to sell their houses.