Default Notices and Evictions Increase in March. Data Still Distorted

by devteam April 16th, 2011 | Share

Foreclosurernactivity overall was down in the first quarter of 2011 when compared tornthe previous quarter and activity from one year earlier, but March figuresrnshowed a month over month increase in the number of default notices and evictions. </p

Foreclosure notices were filed against 681,153 properties in the U.S.rnin the first quarter, a 15 percent decrease from the fourth quarter of 2010 andrna 27 percent drop from filings in the first quarter of 2010. This represents arnfiling on one in every 191 U.S housing units.  March filings, while still dramatically lowerrn- down 35 percent – than in the same period a year earlier,  were up sevenrnpercent from the February number.  Itrnshould be noted that in March 2010 there were 367,056 foreclosure noticesrnfiled, the highest monthly total in the six years RealtyTrac has been reporting this data.</p

This information comes from RealtyTrac’s March U.S. ForeclosurernMarket Report , a monthly compilation of data from the Irvine California firm which tracks documents filed in all three stages of foreclosure:</p

1.  Notice ofrnDefault (NOD) and Lis Pendens (LIS). This is the first legal notification from arnlender that the borrower on a mortgage loan has defaulted under the terms ofrntheir mortgage and the lender intends to foreclose unless the loan is broughtrncurrent.</p

2.  Auction – Noticernof Trustee Sale and Notice of Foreclosure Sale (NTS and NFS): if the borrower does notrncatch up on their payments the lender will file a notice of sale (the lenderrnintends to sell the property). This notice is published in local paper andrncontains information pertaining to the date, time and subject property address.rn</p

3.  Real EstaternOwned or REO properties : “REO” stands for “real estate owned” andrntypically refers to the inventory of real estate that banks and mortgagerncompanies have foreclosed on and subsequently purchased through the foreclosurernauction if there was no offer higher than the minimum bid.</p

Much of the increase in activity since February was in the earliestrnstage of foreclosure, the filing of default notices.  A total of 197,112 U.S. properties received default notices (NOD, LIS) for the first time in the first quarter, a 17 percent decrease from the previous quarter and a 35 percent decrease from the first quarter of 2010. A total of 73,393 properties received default notices in March, up 16 percent from February but still down 37 percent from March 2010.

Foreclosure auctions (NTS, NFS) were scheduled for the first time on a total of 268,995 U.S. properties in the first quarter, a 19 percent decrease from the previous quarter and a 27 percent decrease from the first quarter of 2010. Foreclosure auctions were scheduled on 93,228 U.S. properties in March, down 4 percent from February and down 41 percent from March 2010.

Lenders foreclosed on 215,046 U.S. properties in the first quarter, a 6 percent decrease from the previous quarter and a 17 percent decrease from the first quarter of 2010. In states where the non-judicial foreclosure process is primarily used, bank repossessions (REOs) increased 9 percent from the previous quarter, and March REOs increased on a monthly basis in both non-judicial and judicial foreclosure states.</p

It is not known how much of the current activity represents a real decrease in mortgage distress or if foreclosure activity continues to be hindered by turmoil surrounding reports of improprieties, inefficiencies, and inequalitiesrnin the loan servicing  system.  State andrnfederal regulators have been investigating servicer activities. New rules forrnmanaging distressed loans are being discussed and in some cases actually put inrnplace, and servicers have been retrenching both to improve their processes andrnto protect their reputations.  In somerncases decreases may merely be delays and increases may be the result of earlierrnbarriers to foreclosure or logjams in the system being removed. READ MORE

 “The nation’s housing market continued to languish in the firstrnquarter, even as foreclosure activity fell to a three-year low,” said James J.rnSaccacio, chief executive officer of RealtyTrac. “Weak demand, declining homernprices and the lack of credit availability are weighing heavily on the market,rnwhich is still facing the dual threat of a looming shadow inventory ofrndistressed properties and the probability that foreclosure activity will beginrnto increase again as lenders and servicers gradually work their way through thernbacklog of thousands of foreclosures that have been delayed due to improperlyrnprocessed paperwork.” </p

Nevada and Arizona remained the most active states. One in every 35rnhousing units in Nevada received some type of filing during the quarter butrnthis was down 10 percent from the same quarter a year earlier.  However, after two months of improvement,rnforeclosure activity shot up 35 percent in March.   In Arizona there was big surge in bankrnrepossessions which jumped 26 percent in March. rnFirst quarter activity was also up 15 percent from the fourth quarterrnalthough it improved 17 percent from a year earlier.   One in every 60 Arizona houses receivedrnsome type of filing in the first quarter.</p

California recorded the third highest rate of foreclosure activity withrnone in every 80 housing units involved. rnRepossessions increased 17 percent quarter-over-quarter and Marchrndefault notices were up 28 percent from the month before.</p

Utah moved into fourth place with one in every 98 housing units gettingrna notice followed by Idaho with one in every 106 units affected.   

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About the Author


Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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