Paperwork bottleneck on U.S. foreclosures

Paperwork bottleneck on U.S. foreclosures

July 22nd, 2011 in Opinion Free Press

It might have seemed like good news when it was announced that America's rate of foreclosures dropped almost 30 percent in the first half of 2011. After all, millions of Americans have lost their homes to foreclosure in recent years.

But as it turns out, the seeming drop in foreclosures isn't good news at all. The housing crisis isn't really easing, analysts say. It's just that vast numbers of expected foreclosures haven't taken place yet because the paperwork involved in foreclosures is backing up massively.

RealtyTrac, a national real estate-tracking firm, said the paperwork bottleneck is pushing into 2012 up to a million foreclosures that were supposed to be handled this year.

In other words, foreclosures are still alarmingly high, causing great pain for millions of people.

Recent congressional interventions, such as costly tax credits for home buyers, were supposed to perk the housing market back up. But it hasn't worked out that way. Countless homes are languishing on the market, unsold, and the main thing those expensive tax credits did was increase our national debt.

Many foreclosed homes were lost by people who unwisely took out mortgages at adjustable interest rates that eventually made the payments unaffordable. Those risky loans were also improperly promoted by federal intervention and meddling in the market.

Even among Americans who have managed to hang onto their homes, many have lost a great deal of equity as the market has become glutted and home prices have plunged as a result.

We would love to be able to say that the U.S. housing market has turned the corner and is rapidly recovering. But the numbers sadly don't bear that out.