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This upcoming year is probably not going to be very successful for the housing market. There are many reasons for this conclusion. In a post yesterday I discussed what I see as an unavoidable decrease in home values in the next 12 months. This post, I would like to talk about what seems to be becoming another inevidibility this year: a rise in the number of foreclosures.

According to data provider RealtyTrac, foreclosure activity was down in November. There were 262,000 foreclosure notices issued, which is down 21 percent from the month before and down 14% from the same time in 2009. Believe it or not, this was the first time in almost two years that foreclosure notices dropped below 300,000. At first glance, this low number seems like good news. However, the steep decline can be directly attributed to foreclosure moratoriums issued by large-scale mortgage professionals because of the terribly unorganized paperwork that ended in the robo-signing disaster that is yet unresolved. The decrease in the amount of foreclosed houses in reality could be considered a temporary escape from the inevitable for many families who are stuck in sub-par economic situations.

Senior VP of RealityTrac, Rick Sharga stated:

"In the first quarter, we really anticipate seeing a pretty rapid acceleration of foreclosure proceedings as everybody catches up."

Many, if not all the lenders that temporarily halted their foreclosures have since "evaluated" their processes and paperwork and appear to be set to resume foreclosures. According to a December 15th Reuters article, Bank of America plans to increase foreclosure filings in 2011. Said Barbara Dosoer, President of Bank of America's home loans division:

"We feel comfortable with the results we're getting, so starting in January you will see a ramp-up [in foreclosures]."

The government's programs in place to prevent foreclosures aren't helping either. In particular, the Home Affordable Modification Program (HAMP) federal government's primary program attempting to prevent foreclosures, has been constantly criticize by the press and by government watchdogs such as the Congressional Oversight Panel for being generally "ineffective". The redefault rate on HAMP modified loans is currently at 21 percent, moreover, the United States Treasury itself postulates that the rate could potentially rise to 40% or more when everything is settled. See Entire Article.

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