I have read several articles concerning the foreclosure freeze and felt this was a good one to share.

Looking like more homeowners will be underwater on there home values by the first of the 2011.

Lolita

Article by Gerri Willis published October 14th, 2010

“The Chilling Effect of a Foreclosure Freeze”

The foreclosure fiasco is not just about attorneys general or banks or robo-signers, it’s about homeowners – those that haven’t paid their mortgage and those that have.

This latest crisis impacts an already crumbling housing market – as illustrated by new numbers out today.

Lenders seized more homes this summer than in any three month stretch since 2006. More than 288,000 properties were lost to foreclosure in the third quarter. That’s up from nearly 270,000 in the second quarter.

The numbers showed 816,000 homes have been seized through the first nine months of the year and banks are on track to seize 1.2 million by the end of 2010.

Already more than 2.5 million homes have been lost to foreclosure since the recession started.

But many of the foreclosures may be challenged in court because of robo-signer allegations.

The freeze by some banks could mean we won’t top the million mark this year, but we’ll see a ridiculous spike at the start of next year.

That could have a severe impact on home sales and home prices – pushing hard-working Americans even more underwater on their homes.

A freeze in foreclosure sales between now and December could amount to removing 30% of all home sales for that period. Moody’s says that’s good news if you’re a homeowner looking to sell in the near term, because there won’t be as much competition. If you’re looking to sell further down the line, well that’s not so good news.

Settling allegations of fraud could take months for the banks and they could be subject to financial penalties.

Here’s what banking analyst Dick Bove told me last week: JPMorgan said extending its review of foreclosure cases to 41 states would double the number of cases under review to 115,000.

GMAC and Bank of America are reviewing procedures in all 50 states. An Ohio lawsuit filed by the attorney general is seeking damages for consumers of $25,000 for each violation.

And the fiasco is hurting stocks: shares of Bank of America, Wells Fargo, Citigroup and JPMorgan fell between 4% and 6% today.

If similar cases were brought in all 50 states, it could total billions of dollars in damages and fines for lenders and others involved in foreclosures.

So what does this mean for you? Good luck trying to get a bank to give you a mortgage; as if they weren’t gun shy enough already.

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