Foreclosure Tax Credit Not the Reason for Low Foreclosure Filings

by on Foreclosures

The approval of the foreclosure tax credit actually gave the industry hope that the housing market can recover. But although foreclosure flings for the month of January declined, the reason is not because of the said incentive. Instead, experts are looking at the banks’ decision to halt foreclosure proceedings due to claims of illegal repossessions. January numbers were supposed to be higher, but since it is not, analysts are expecting the increase to happen in the coming months.

The number of notice of default, foreclosures at auctions, and bank foreclosures for sale in Richmond dropped by 44 percent during the first month of the year compared to the same month last year. On the other hand, the number of filings, including foreclosures in Virginia, dropped 42 percent for the said time frame. Nationwide, filings declined by about 17 percent.

For the last three months, foreclosure filings involved less than 300,000 homes. But this should not be taken as a sign that the market is recovering in a robust manner. It could be a sign though, that lenders are having difficulties following the regulators order to look over each of the foreclosure paperwork more thoroughly in order to avoid wrong repossessions. The decision of the federal government to implement stricter guidelines is just one of their efforts to help the industry. Their foreclosure tax credit program is also one of their best ideas to date.

But despite the false sense of security the low foreclosure filing numbers bring, experts believe 2011 will not bring in as many bank foreclosure homes. This could happen by the year’s end.

Nationally, the same states posted the highest foreclosures rate despite the many federal programs designed to provide relief to the troubled housing market, such as the foreclosure tax credit. For the 49th straight month, Nevada posted the highest foreclosure rate, with one filing for every 93 households.