(Reuters) – Half a decade into the deepest U.S. housing crisis since the 1930s, many Americans are hoping the crisis is finally nearing its end. House sales are picking up across most of the country, the plunge in prices is slowing and attempts by lenders to claim back properties from struggling borrowers dropped by more than a third in 2011, hitting a four-year low.
"We are right back where we were two years ago. I would put money on 2012 being a bigger year for foreclosures than 2010," said Mark Seifert, executive director of Empowering & Strengthening Ohio’s People (ESOP), a counseling group with 10 offices in Ohio.
"Last year was an anomaly, and not in a good way," he said.
In 2011, the "robo-signing" scandal, in which foreclosure documents were signed without properly reviewing individual cases, prompted banks to hold back on new foreclosures pending a settlement.
But nobody in the Real Bay Area got foreclosed on, right? This is what happens in flyover states. And flyover cities, like, um, San Jose.
And while nobody would mistake the Bay Area for the troubled city of Stockton (where home values are not expected to hit 2006 values again until the year 2030), the resumption of the Foreclosure Express by many banks will be leading to more short sales and bank-owned properties.
Blame it on the settlement that 49 states made with the major banks. Now that the process is no longer under so much uncertainty, foreclosures that have been put on hold will resume. And this time around, the lucky participants won’t be brought in courtesy of high-interest, no-down subprime loans. Plain old unemployment will be the cause of most of the unpaid mortgages.
Zillow is projecting all kinds of gloom and doom because of this, including a housing market that won’t hit bottom until next year, and stay on the bottom until 2016.
"The hangover from this crisis will far outlast the party of the boom years," said Zillow chief economist Stan Humphries.
Share your predictions on how this economic tragedy that could evict millions of homeowners will affect the Real Bay Area. This is an Open Thread.