Reply #7: Another Trend Has to be Factored in, Too [View All]

[On the Road]

An increasing number of people avoid foreclosure by selling to investors or brokers. If you've gotten junk mail or seen signs labelled "We Buy Houses" recently, it's because more people are doing it.

Most sales like this are based on the remaining balance on the home equity loan. If there's enough equity in the house, the owner can avoid a foreclosure and walk away with a few thousand dollars cash, the broker can get a cheap property, and the bank can avoid the expense and trouble of dealing with a foreclosed property.

The number of houses that are heading for foreclosure is thus a lot higher than actual foreclosures, and the difference is increasing.