Foreclosure filings drop - short sales incrrease - mortgage distress lumbers on

Real estate market observers have mixed feelings about RealtyTrac's Midyear 2010 Foreclosure Report. It says that 1,654,634 homeowners were sent at least one mortgage foreclosure filing from January through June. That translates to over 3,000,000 by the end of the year and RealtyTrac forecasts that over 1 million of them will eventually become repossessions, or REOs - real estate owned. The number by itself is of course alarming, but the current six month number actually is a drop of 5% from the second half of last year. Ordinarily in any housing enterprise that would be something to feel upbeat about.

On closer look the mortgage picture isn't all sweet grapes and chocolate treats after all. Home loan lenders and servicers have lately changed course to give a short sale a chance to work before filing foreclosure notices. The government has aggressively promoted its mortgage loan modification programs that have had a preventive impact despite the private sector's reluctance to get fully engaged. Yet, these initiatives have been a disappointment when measured by their originally announced goals. Moreover, mortgage lenders often are disorganized and undermanned to handle the torrent of foreclosures and their workforces seem to lack the necessary training to be effective, therefore foreclosure action can be delayed for months.

These factors have shifted the emphasis away from mortgage foreclosure statistics and are obviously responsible for the 5% decrease. In the meantime distressed properties continue to saturate unabated the landscape from Las Vegas to the shores of Florida. A great many are underwater and are hard-pressed to find any meaningful relief in the near future. The job situation is slowly improving at least in some regions but still isn't strong enough to decisively begin lifting struggling homeowners to their feet.

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