Existing-home sales rose 2.1% in October, with the number coming in slightly above expectations, although the previous month’s numbers were revised down. Inventory has decreased 21% year-over-year (in no small part due to structural factors like trapped borrowers not putting their houses on the market, as well as artificial constraints on supply from banks keeping homes off the market).
These are relatively positive numbers for housing. But I want to highlight how analysis of trends in the market completely discount due process as a legitimate activity for borrowers.
Consider this report on mortgage delinquencies. It starts out by saying the delinquency rate has fallen. However, it immediately explains that those judicial foreclosure states are ruining everything with their double-check on the true ownership of the loan and all that nonsense:
The Mortgage Bankers Association said Thursday that 4.1% of mortgage loans on one-to-four-unit homes—about 1.9 million households—were in the foreclosure process at the end of the third quarter, down from 4.4% a year earlier and the lowest level in 3½ years.
The national average, however, masks big differences between the states. Among the 12 states with foreclosure rates that exceed the national average, 11 of them require banks to take back properties by going to court.
Foreclosure rates stood at 6.6% in those “judicial” states in September, while they have dropped sharply to 2.4% in the “nonjudicial” states where banks face fewer hurdles to foreclosure.
Are we supposed to believe that there’s a material difference among borrowers in a judicial and non-judicial foreclosure state? Are those non-judicial states filled with more “responsible” homeowners who don’t default on their loans? Of course not. The only reason the rates are lower in those states is because banks can fast-track borrowers through the foreclosure process. In states where banks have to, you know, prove that they own the loan, they increasingly have trouble doing it.