I talked before about the MERS issue and MERS rulings causing problems for real estate in Oregon not too long ago. Recently, the appellate court dealt a blow to banks by indicating that the non-judicial foreclosure laws have not been followed for MERS involved properties. This issue will move on to the Supreme court to set the tone for what will happen to these properties in foreclosure. What this means is those properties, about 50% of real estate foreclosures in our area, are on hold until the Supreme Court rules on it. The good news is that in short term, this has caused inventory to be reduced significantly. The bad news, is that these properties have to be dealt with in some manner. For homeowners currently in these properties, it can mean a reprieve while the court handles this case. For homeowners that have left their properties, it means a house heading into dilapidation.
When MERS foreclosures were first tied up in courts, we immediately saw Wells Fargo and Chase convert to the court route and proceed with judicial foreclosures. Currently, I am seeing that Countrywide/BofA, Washington Mutual (aka Chase), and many smaller mortgage holders have gone the route of the courts as well since it could take several more months for the Oregon Supreme Court to rule. Home owners facing foreclosure should prepare themselves for a notice to appear in court.
In the meantime, foreclosure notices dropped 13.7% over the first half of last year. It remains to been seen what will happen with foreclosure rates as banks might need to catch up from that third quarter drop and judicial foreclosures take much longer to get through the court process. It will be years before some of these homes hit the real estate market. In the meantime, the lower inventory has made 2012 the best time to be a seller in the past five years.