Posted on Friday, February 04, 2011
Robo-signing, fraud and other documentation concerns that prompted some lenders to turn off the spigot of foreclosures temporarily last fall will likely stall housing recovery for a year.
That was the prediction Friday from well-known economist Mark Vitner, who was among the speakers at an economic outlook conference sponsored by the Urban Land Institute Southeast/Caribbean District Council.
“That slow down of foreclosures has pushed out the timeframe when we would have gotten through that critical mass of foreclosures that would have led to stabilization,” he told the hundreds of developers, brokers, lawyers, public officials and financiers gathered for the half-day conference at the Seminole Hard Rock Hotel & Casino in Hollywood.
So, instead of seeing price stabilization later this year, it will likely be 2012, said Vitner, managing director and the senior economist at Wells Fargo.
Allegations over robo-signing led to temporary lender moratoriums to inspect paperwork and procedures and trampled down foreclosure rates in Florida and across the nation.
Bank of America Corp., JPMorgan Chase & Co. and Ally Financial temporarily halted some foreclosures while they investigated their practices.
They later restarted foreclosures, but those properties won’t make it to the market in time for the spring selling season.
And once you miss that, Vitner says, the chance of recovery is lost for another year.
Vitner said he expected to see cumulative home prices continue to decline by 6 to 8 percent for the next seven to eight months, perhaps bottoming out later this year.
He said one of the biggest problems still facing Florida’s economy is “the hangover from the housing bust.”
South Florida Business Journal - by Darcie Lunsford