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Sale of Homes Under Listings of Distressed Houses Expected to Stall

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By : John Cutts    99 or more times read
Properties under listings of distressed houses account for over 25% of all home sale transactions in the U.S., according to nationwide residential property data. With several big-name mortgage companies announcing a moratorium on foreclosures, housing market analysts are expecting buying activities to stall.

According to market analysts, the halt will likely discourage buyers of properties under bank owned listing, mainly because of legal concerns. They added that this will cause a significant drop in housing sales, particularly among foreclosed and distressed dwellings which account for a fourth of total sales transactions.

Questions regarding the validity of the foreclosure proceeding used by major mortgage servicers have created doubts among home buyers, according to economists. Buyers will likely shy away from purchase transactions for fear that property titles and procedures used in repossessing properties were legally questionable, economists have added.

Sales of foreclosedhouses at auctions, repossessed dwellings and other types of distressed residential properties are expected to get hit hard by the moratorium. Analysts are also predicting that after six months, or after the issue has been sorted out, these properties will hit the housing market in big numbers and will further pull home values down.

The decision of major lenders, like Bank of America, JPMorgan Chase & Co. and GMAC Mortgage, to freeze activities involving listings of distressed houses came after revelations that some employees at these firms are processing foreclosures without reading documents in an effort to speed up the procedure.

Two of the states whose foreclosure market sales will be affected greatly by the freeze are Nevada and Arizona. According to real estate experts, the two areas have the highest foreclosure numbers, which logically means that sales of homes in both states are largely accounted for by distressed homes.

In Nevada, over 50% of sold homes for the second quarter of 2010 are foreclosed. Arizona is second to Nevada in terms of foreclosed residential properties accounting for total home sales at 47%. California is third with 43% of its total home sales represented by foreclosures. Several other states have at least a third of their total home sales accounted for by properties under listings of distressed houses, with Florida, Massachusetts and Rhode Island leading the way.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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