Watch Foreclosures, Seriously

Published: Friday, 6 Nov 2009 | 1:52 PM ET

By: Diana Olick
CNBC Real Estate Reporter

CNBC.com Saving Housing

While the Realtors and Home Builders and Mortgage Bankers all bask in the glow of the home buyer tax credit extension/expansion, we all need to turn our attention to the real drag on a housing recovery: Foreclosures.

Yeah, I know, everyone seems kind of tired of talking about them; we've got the government modification program in place. Big banks are all ramped up with the program, Fannie Mae [FNM  1.04  -0.08  (-7.14%)   ] is letting folks who don't qualify for mods stay in their homes and rent, and foreclosure inventories in the big bad hardest hit states are actually drying up as investors get in and grab up the bargain basement properties.

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Clear Capital, a "provider of data and solutions for real estate asset valuation," notes that home prices are improving thanks to fewer foreclosure sales. "The continued decline in REO saturation rates, as well as an increase in the proportion of cash buyers in both distressed and fair market sales, are an encouraging sign of investor optimism coming into the traditionally slow months," says Clear Capital's Sr. Statistician, Alex Villacorta.

That's because banks and Fannie and Freddie [FRE  1.23  -0.02  (-1.6%)   ] are slowing the process, trying to jam as many borrowers into mods as possible. They're also overwhelmed by the sheer numbers, leaving many many delinquent borrowers still sitting in their houses scott free without hearing word one from their lenders. But that's going to change.

Read the rest of the article here.