Foreclosures are expected to peak in 2011, but the long-term forecast is improving, according to a report by the Wall Street Journal. According to Rick Sharga of RealtyTrac, an online marketplace for foreclosed properties, the number of foreclosures in 2011 will top both 2009 and 2010, which had 900,000 and 1.2 million bank repossessions, respectively.
The biggest cause of the peak will likely be the “robosigning” controversy, which earlier this year caused many banks to stop foreclosures until paperwork processing issues could be resolved. The delay will push many foreclosures that would have occurred this year into next year. Further causes include high unemployment rates, increased payments due to interest rate changes on adjustable-rate mortgages and lower approval rates for loan modifications from the Treasury Department.
The foreclosure crisis does appear to be improving the long term, however. According to the report, fewer homeowners are becoming delinquent on mortgage payments, with 30-day delinquencies down 11 percent, the lowest since early 2009. A forecast by credit-reporting company TransUnion predicts that delinquencies will continue to fall as employment rates increase.
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