SILVAR  :  Newsroom  : Real Estate Articles

Real Estate Articles

Foreclosures not going away anytime soon

Wednesday, June 15, 2011

When it comes to foreclosures and short sales, there is not much good news on the horizon, a foreclosure data expert told Silicon Valley REALTORS® last week. Michelle Lenahan, director of Customer Service & Training for Foreclosure Radar, said REALTORS® have become more valuable today than in the past because these types of transactions aren't going away anytime soon. In fact, sharing valuable information on these types of transactions is a great way to start a conversation with clients, she said.

Examining trends in foreclosure and bank owned properties in the Bay Area, Lenahan said news that delinquencies are down and the foreclosure rate is flat is deceiving because there are 2.2 million homes underwater. One million homes are currently in some stage of the foreclosure process, and it could take as long as 50 months to get them through the market. "This means we're not even going to see a recovery till 2014," she said.

Lenahan attributed the slowdown in the foreclosure process to the moratorium and new federal laws created since 2008. As a result, banks have slowed the process, so even if delinquencies are up, the time it is taking the banks to foreclose on a home is lengthening. The reality is more and more people are sitting in their homes and not making the payments.

According to Lenahan, distressed homeowners are delinquent on their payments an average of 398 days, but it is taking banks an average of 312 days to foreclose on a home. That's a total of 710 days - nearly two years to complete the full foreclosure process and the length of time is increasing. She explained banks are not following up quickly because they don't have to take the losses on a home until they actually foreclose. About 2,500 homeowners who received notices of defaults in 2008 are still sitting in their homes or only now in trustee sale. She believes if banks had foreclosed on these homes three years ago, the homeowners would have started the healing process sooner and become home buyers today.

Don't expect a wave of foreclosures to hit the market in a big way at any time. "It's not going to fall out of the sky," she remarked.

At the same time Lenahan assured REALTORS® there is no bad news in real estate "because people still want to live in homes." In her opinion, the risk to home values in the state is not dependent on foreclosures, but on the tightening of lending standards "because people will borrow as much as the lenders will allow them."

The foreclosure data specialist said there has been little improvement in short sales and loan modifications. There are 2.2 million homeowners that still need help; 900,000 have already stopped payments. There are professionals who are not yet in default, but are looking for a way out and someone they can trust to guide them. There are also budding investors out there. In Santa Clara County alone, $26 million worth of properties have been purchased by investors at auctions.

The bottom line is people need good real estate representation. Lenahan suggested sharing valuable foreclosure and short sales information with present or potential clients and showing them the map overview of foreclosure statistics. Also, don't judge, be discreet, carefully list and advertise, and build a team with a credible attorney and CPA.

She noted REALTORS® are still in the same business, but are now having different conversations with their clients. "It's a great time to deliver foreclosure information because people really need and want real estate data today," Lenahan said.


The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.

The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.

Variations of this article have appeared in local area newspapers.

For further information, please contact Rose Meily at SILVAR Public Affairs, email , or phone (408) 200-0109.

» Back to Real Estate Articles

Site Navigation