More local homes have gone into foreclosure this year, but the increase isn’t due to a change in the economy.
Instead, the homes and properties now being taken back by the banks have been near foreclosure for months or even years. The delay was in the paperwork and signatures needed from bank officials to actually start the foreclosure process, experts said.
Last year, the number of foreclosures was down significantly. But this year, those numbers are back up. In Johnson County, 499 homes and properties were set for sheriff sale through July, the first step in the foreclosure process. That is a nearly 47 percent increase over July 2011.
The same is true across other central Indiana counties. In Hamilton County, the number of properties set for sheriff sale increased 27 percent during the same time frame.
In this case, the rise in foreclosures isn’t indicating another drop in the economy or housing market, said Matt Will, associate finance professor at the University of Indianapolis.
“This is not a sign of new economic turmoil or anything additional happening. This is a backlog that was already in the system,” Will said.
The increase in foreclosures stems from a paperwork issue banks and lenders across the nation had, known as robo-signing. Banks were filing so many foreclosures due to the sluggish economy, they couldn’t keep up with the proper filing process, said Alan Thorup, executive director of the Indiana Mortgage Bankers Association.
One of the biggest issues was in having the proper people signing the paperwork needed to start the foreclosure process. Because so many foreclosures were being filed, that wasn’t always happening, Will said.