Harris County is seeing the result of failed government efforts to fix the housing crisis by issuing 90-day moratoriums on foreclosures.
July was the worst month for foreclosures in the county since the savings and loan debacle, just 73 properties short of the record month -- October 1987 -- according to numbers from the Woodlands-based Foreclosure Information & Listing Service.
"If you were three months behind on payments, it's not like you were going to get caught up in 90 days," Erion Shehaj, a broker for Houston's Signature Real Estate, tells Hair Balls. "It was a political play more than anything else."
Harris County posted 4,466 foreclosures this month, up from 2,523 from the same time last year, an almost 80 percent increase. Surrounding counties also saw big boosts, with Fort Bend County increasing 70 percent from last year, and Montgomery County having a 120 percent jump.
"I thought we'd never see anything close to 4,000 [foreclosures] again," says Ralph Murdock, who runs the listing service in the Woodlands. "I was shocked."
The moratoriums started in October, mainly from the "government sponsored enterprises" like Fannie Mae and the U.S. Department of Housing and Urban Development. To be politically correct, says Murdock, the big mortgage lenders like Bank of America and Wells Fargo followed suit, issuing moratoriums of their own. They all ended in March.
Some people facing foreclosure were able to re-negotiate the terms of their mortgages during that period, Murdock says, but not enough to put a dent in the absurd number of subprime buyers who took out bad loans. The spike in foreclosures was delayed, he says, by typical bureaucratic muck, with the paperwork on filings dragging through the system.
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"It was like the floodgates opened and the dam broke," Murdock says.
Demand for foreclosed properties remains high, however, with buyers engaging in a bidding war for low-end properties -- in the $80,000 range -- sometimes paying above market price to cash in on the government's stimulus for first-time buyers, according to Shehaj.
"It's not even like it's a tax credit," he says. "If you don't owe the government any taxes, they'll just send you a check for $8,000."
The numbers from August have just been completed but not released, and foreclosures dropped significantly to a little more than 3,000, according to Murdock.