Despite Commerce Department data indicating the beginning of a housing market recovery, steadily increasing foreclosure activity will likely prevent it.
New-home starts increased in July, the government said, but more initial bank notices announcing impending foreclosure are being sent to homeowners in default, Businessweek reports.
New bank foreclosures leaped 6 percent higher in second quarter 2012 compared to last year, the first annual increase since 2009, according to data from RealtyTrac, a foreclosed property listing service, included in the article.
"The increase may reflect February’s $25 billion settlement among 49 state attorneys general and the five major mortgage servicers for improper and fraudulent paperwork related to foreclosures, according to a Bloomberg Government study," reports Businessweek.
First notices on new bank foreclosures were held back from homeowners in default pending a settlement in the case. The number of homes in default could potentially reach new heights if owners cannot make payment arrangements and stay in their homes.
Property management companies reeling from rental housing shortages may find relief if the demand for residential leases brings them a new inventory in foreclosed single-family homes.