Connect with us

Hi, what are you looking for?

The American GeniusThe American Genius

Housing News

Housing challenge: passing on disposition costs

Could extended disposition timeline costs passed on to consumer? CoreLogic economists have analyzed the current state of the economy and weighed in.

southern home

housing

Extended disposition timeline costs passed on to consumer?

According to CoreLogic’s Chief Economist, Dr. Mark Fleming notes that in the current economic climate, the costs of the extended disposition timelines of distressed assets could ultimately be passed on to the consumer, adding yet another challenge to the recovery of the housing sector.

Dr. Fleming explains, “Consumer costs are also likely to rise with more regulatory oversight of mortgage servicing practices. Whether federal or state, such as the California Homeowner’s Bill of Rights, these regulations increase the time it takes to dispose of a distressed mortgage asset.”

“Extended disposition timelines impose operational costs on servicers, carrying costs on investors in the mortgages, and in some cases, significant legal risk and compliance costs,” Dr. Fleming continued. “The likely result is more expensive mortgages and possibly increased rationing of credit based on the additional cost of disposition, which may vary dramatically by local foreclosure process requirements.”

The company reports that the time it takes for a distressed property to pass through the entire disposition timeline has risen across all states in the last 10 years from an average of seven months to 24 months in non-judicial states and 35 months in judicial states.

Advertisement. Scroll to continue reading.

Housing and REO inventory levels

The decline in REO inventories driven by investor demand has been uneven across markets, as Northeastern and Midwestern housing markets continue to struggle with elevated REO inventory levels, while levels have dramatically declined in the South and Southwest.

Institutional investors accelerated REO purchases in select markets in 2012, most notably in Las Vegas, Atlanta and Phoenix, while individual investor activity was responsible for declines in REO inventory in California markets.

Dr. Fleming concludes that “among mortgage lenders, the cost of disposition is better recognized and understood today than ever before. The costs are higher across the board and even more so in judicial states. Recognizing this cost of mortgage lending will lead to differentiated pricing of loans to reflect either differences in disposition timelines, differentiated minimum qualifications for credit or both.”

Advertisement. Scroll to continue reading.

Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.

1 Comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Advertisement

The
American Genius
news neatly in your inbox

Subscribe to our mailing list for news sent straight to your email inbox.

Advertisement

KEEP READING!

Business News

(Business News) The FTC recently got involved in the proposed acquisition of DataQuick by CoreLogic, but who alerted the FTC and why?

Housing News

(Housing News) According to the NAHB, home buyer preferences vary according to their ethnicity; builders and agents can better serve clients by understanding their...

Housing News

(Housing News) As qualifying for a mortgage remains difficult, new homes being purchased are increasingly large, with many more 4+ bedroom homes flying off...

Tech News

(Tech News) MoveMent app has added some impressive new features and is now the only way for agents to directly syndicate to Realtor.com in...

The American Genius is a strong news voice in the entrepreneur and tech world, offering meaningful, concise insight into emerging technologies, the digital economy, best practices, and a shifting business culture. We refuse to publish fluff, and our readers rely on us for inspiring action. Copyright © 2005-2022, The American Genius, LLC.