Charlotte’s foreclosure woes might not be over

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Litton Loan Servicing is among the clients of Caudle Law Firm in Charlotte.

But since November or so, Caudle has not been able to take any foreclosure properties to sale for Houston-based Litton, said Tiffany Smith, a paralegal for Caudle.

Litton, a subsidiary of Goldman Sachs, collects mortgage payments from homeowners. Late last year the company halted foreclosures to review how they are being handled, while other lenders, such as Charlotte-based Bank of America, did the same.

For now, the files that Caudle handles for Litton are on hold, Smith said.

Once Litton’s pause is over, though, she expects a surge of activity in her office.

“We’re going to have a lot of foreclosure sales,” she said.

It’s a prediction being repeated by other Charlotte real estate professionals: Expect more foreclosure sales in the region.

“There’s more and more things coming on the market every day in this area,” said Rory Cummins, a Charlotte residential real estate investor, general contractor and landlord.

In the first quarter of this year, and possibly in the second quarter, there will be a wave of foreclosures in the Charlotte area, he said.

“I think now they’re (the banks) just trying to get everyone off the books,” he said.

He’s not alone.

Tony Smith, president of Wanda Smith & Associates, a Charlotte real estate company that sells primarily foreclosed homes, also expects foreclosures to pick up.

“I think you’re going to see the floodgates open in the next couple of months,” he said. “It’s going to seem excessive. But then it should level back out and reach a more normal level.”

This week, The Wall Street Journal reported that Bank of America confirmed Tuesday that it halted the issuance of default notices as part of its nationwide moratorium on foreclosures last year. The bank put U.S. foreclosure sales on pause in October after it said it had employed people who attested to the accuracy of foreclosure paperwork without reading it, a process referred to as “robo-signing.” The bank resumed the foreclosures, and issuing the notices of default, in December, according to the WSJ story.

“In my opinion, notice of defaults is part of the foreclosure process and, therefore, the fact that we halted notices of default along with foreclosures during our review is not news,” Bank of America spokeswoman Jumana Bauwens said in an e-mail to The Mecklenburg Times.

But the halt could have ramifications.

Smith said Bank of America’s pause on issuing default notices will create a backlog of foreclosed homes.

When Bank of America resumed foreclosure sales in December, Charlotte’s housing market simply played catch-up by selling foreclosure properties that were already in the pipeline, Smith said. Much of that inventory is now off the market, he said. But he expects an increase in foreclosure properties in the area.

“There’s the perception that because foreclosure filings were down between October and December things are getting better. But they’re not,” he said. “That was simply because of the moratorium. It provided false hope, and I think we’re about to see more foreclosed inventory hit the market.”

More foreclosures in Charlotte come with the potential for housing prices slip even further. On Tuesday, Standard & Poor’s Case-Shiller Home Price Index showed Charlotte housing prices fell 4.3 percent in November from the same month in 2009 and 0.4 percent from October to November.

Cummins is waiting to see what impact additional foreclosures will have on home prices in the Charlotte area.

“Hopefully, it doesn’t drop prices any further than they are,” he said. “I would say that it’s going to keep inventory out there longer than they need to be.”

Smith said Caudle’s other five or so clients don’t have a pause on foreclosure sales. Bank of America is not one of the company’s clients.

Some Charlotte real estate agents, such as Bonnie Downey, expected an uptick in foreclosures after moratoriums on foreclosure sales were lifted last year.

But that never came, said Downey, who works with foreclosed properties from Fannie Mae.

“I’m down from 104 (properties) at the time we removed them,” she said. “Now I don’t even think I’ve got 75 listed.

“Usually we have a steady stream. Now it’s barely a trickle, and I have no idea why.”

— Sam Boykin, Caitlin Coakely and Deon Roberts contributed to this story.