Foreclosure Activity Slows: Is This Really a ‘Good’ Thing?

10-Mar-2011

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Mr. Gao co-found and became the CFO at Oxstones Capital Management. Mr. Gao currently serves as a director of Livedeal (Nasdaq: LIVE) and has served as a member of the Audit Committee of Livedeal since January 2012. Prior to establishing Oxstones Capital Management, from June 2008 until July 2010, Mr. Gao was a product owner at Procter and Gamble for its consolidation system and was responsible for the Procter and Gamble’s financial report consolidation process. From May 2007 to May 2008, Mr. Gao was a financial analyst at the Internal Revenue Service’s CFO division. Mr. Gao has a dual major Bachelor of Science degree in Computer Science and Economics from University of Maryland, and an M.B.A. specializing in finance and accounting from Georgetown University’s McDonough School of Business.

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The number of housing foreclosures are falling. There were slightly more than 225,000 foreclosure proceedings in February, down 14% compared to January, and an even more impressive 27% drop vs. a year ago, according to RealtyTrac.

Good news for struggling homeowners, as more of you are staying in your home. However, this doesn’t mean the housing market has turned the corner.  The decrease in foreclosure activity, RealtyTrac says, is likely due to a slowdown in filings because of various lawsuits regarding improper foreclosures by the banking industry.  If anything, the legal holdups are probably just dragging out the process and will prolong any real estate resurgence.

The housing market remains troubled.  December’s S&P/Case-Shiller Index showed a drop in home values across the board. Like Case-Shiller, RealyTrac’s data shows the hardest hit areas are still suffering. Foreclosure activity is still highest in Nevada, Arizona and California.

The solution according to Aaron and Henry is to let nature takes its course.  The Obama administration’s mortgage modification plan is having little lasting effect.  The principle reduction ideas being floated may help existing homeowners and may aid banks somewhat, but they likely keep prices inflated and dissuade those on the sidelines from buying. (See: “Pretty Ham-Fisted”: Glenn Hubbard Reviews Obama’s Newest Housing Fix)

 

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