If you are like many folks, myself included, you may have been in your car and heard a brief news item earlier about how there was a decline in foreclosures reported in January. And, if you are like many folks, myself included, you may have said to yourself (if, that is, you are the kind of person who typically likes to say things to yourself) that this is surely good news; another sign that a weak economic recovery may be picking up steam?
But to paraphrase the ancient rock group The Who, please, please, don't get fooled again!
The sad fact is, there is solid reason to believe that home evictions are likely to actually increase in the coming months. How can that be, if the foreclosure rate in January went down?
The head of RealtyTrac , James Saccacio, sums it up nicely: "January foreclosure numbers are exhibiting a pattern very similar to a year ago: a double-digit percentage jump in December foreclosure activity followed by a 10 percent drop in January," Mortgage News Daily reports. But, and here comes the punch line, " If history repeats itself we will see a surge in numbers over the next few months as lenders foreclose on delinquent loans where neither the existing loan modification programs or the new short sale and deed-in-lieu of foreclosures alternatives works."
In other words, the January decline in foreclosure rates may actually turn out to be a sort of perverted indicator not of good times to come, but bad.
RealtyTrac, in fact, reports that for the month of January, the rate of everything from default notices to bank repossessions were actually more than 15 percent higher than the year before.
Now, it is certainly true that the government recently announced measures to, in theory, make it easier to obtain a permanent mortgage loan modification. But that doesn't really go into effect till June, a virtual eternity in the current economic climate. And, even if it actually works, it would be many months after that before we would see any significant change in direction as far as the long range foreclosure rate is concerned.
There is a lesson to be drawn from this post: In critical economic times such as these, it is vital that you evaluate all reports, surveys and, yes, even blog posts, with a critical eye. Often, reality -- and real estate -- is very different upon closer inspection that it might appear at first glance.
Before you rush into any decision about your future based on projections of what mortgage rates may or may not be in the months ahead, or where the best and worst cities are to set up shop, or the best banks or worst lenders to do or not to do business with, step back. Read between the lines. Connect all the dots. You will find that sometimes, what appears to be good news is really bad, but also, sometimes, what appears to be bad news just may end up being good!
Charles Feldman is a journalist, media consultant and co-author of the book, "No Time To Think-The Menace of Media Speed and the 24-hour News Cycle." He has written about real-estate related issues for several years.
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