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Tuesday, October 26, 2010

Foreclosures push home prices down in many cities

The backlog of inventory is expected to 40 months, not including any lawsuits or tax law changes.
Millions of foreclosures are expected to pour onto the market in the coming years. That's likely to force prices down and hurt even cities that had begun to rebound. Investigations into banks' foreclosure paperwork could further deter buyers and weigh down prices...
..But the foreclosure problem is far from over. A "shadow inventory" of homes on the verge of foreclosure is bound to force prices lower well into next year. About 2 million loans are in foreclosure, and another 2.4 million borrowers have missed at least 90 days of mortgage payments, according to LPS Applied Analytics.
"It's like a never-ending supply" of homes, said Daniel Alpert, managing partner at the New York investment bank Westwood Capital. He expects prices to fall another 10 percent over the next year -- and not improve much after that...
Then there is the cloud of foreclosure-gate
...It's still unclear how the allegations of lenders using flawed documents to foreclosure on homes will affect housing markets. Bank of America and Ally Financial Inc.'s GMAC Mortgage have started processing foreclosures again, after calling a temporary halt while they reviewed mortgage documents.
Some buyers are worried that the sale of a foreclosure could be contested -- or even canceled -- if the previous owner claims the foreclosure was invalid.
In an October survey taken by the National Association of Realtors, about 23 percent of real estate agents said they have a client who is no longer interested in purchasing a foreclosed property due to the foreclosure-document mess.
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