Foreclosure rates are low in Texas compared with the rest of the nation. Nationally, foreclosure sales accounted for 23 percent of homes sold in 2011. In Texas, foreclosure sales only accounted for 9.9 percent of home sales while in Nevada they made up 54.1 percent of all home sales.
As startling as these statistics are they could have been much worse. Mortgage companies have not pursued foreclosure as aggressively as they could have because of fears of improper execution of foreclosure sales and scrutiny from the government. Once these issues are resolved later this year we will likely see an increase in foreclosure sales. Mortgage companies must at some point dispose of distressed properties in order to recoup the money loaned for mortgages. Delay causes the value of the lender’s security interest to be diminished due to unpaid property taxes receiving priority lien status and reducing the amount that can be recovered after foreclosure of the property. Eventually mortgage companies will need to begin foreclosing on properties and for them the sooner the better.
With the increase in foreclosures we should also see an increase in Chapter 13 bankruptcy filings. Chapter 13 cases allow homeowners to prevent foreclosure and cure the mortgage arrears by repaying them in a reorganization plan, so increases in foreclosures naturally result in increases in bankruptcy filings.