How with the recently negotiated National Mortgage Settlement effect the current Knoxville housing market?
Foreclosures in Knoxville have been significantly slowed since the third quarter of 2010. Since that time banks have been concerned about the penalties they would face from the settlement and in turn chose to delay the actual seizure of foreclosed properties until the settlement was reached. These foreclosures in question are known as the ‘shadow inventory’ which is currently hanging over the market.
Now with the settlement complete the banks have a roadmap they can follow which will allow them to repossess a home without penalty. The “shadow inventory” of distressed properties will now find it’s way through the process and be put on the market for sale. This means we will be seeing an increased amount of foreclosures in Knoxville hit our local real estate market.
Rick Sharga, executive vice president for Carrington Holding, explains:
“The bottom line is that 2012 will see a lot of foreclosures that should have taken place in 2011 and didn’t.”
How will this effect the housing market? Good in the long run, not so good for prices in the short run.
The Washington Post reported:
“Mark Vitner, a senior economist at Wells Fargo Securities, said the settlement helps the housing market in the long run because it allows banks to proceed with millions of foreclosures that have been stalled.”
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