Despite January Numbers, Annual Foreclosure Rate Down

by devteam February 16th, 2012 | Share

RealtyTrac reported this morning thatrnforeclosure activity rose 3 percent in January as several states posted spikesrnin one or more steps in the process.  Foreclosurernfilings were reported on a total of 210,941 U.S. properties or one in every 624rnhousing units during the month, however, even with the month-over-month increasernin filings overall activity was 19 percent below that in January 2010.  </p

RealtyTrac, an Irvine Californiarncompany, compiles a U.S. Foreclosure Market ReportTM each month by trackingrndocuments filed in the three stages of foreclosure:</p

1.  Notice of Default (NOD) and Lis Pendens (LIS). This is the first legal notificationrnfrom a lender that the borrower on a mortgage loan has defaulted under thernterms of their mortgage and the lender intends to foreclose unless the loan isrnbrought current.</p

2.  Auction – Notice of Trustee Sale and Notice of Foreclosure Salern(NTS and NFS): if thernborrower does not catch up on their payments the lender will file a notice ofrnsale (the lender intends to sell the property). This notice is published inrnlocal paper and contains information pertaining to the date, time and subjectrnproperty address. </p

3.  Real Estate Owned or REO properties : “REO” stands for “real estate owned”rnand typically 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

Filings in two of the three categoriesrnabove rose during the month and the third, default notices were unchanged fromrnthe previous month with 58,362 filings. rnThis was 22 percent less than one year earlier.  Foreclosure auctions were scheduled on 86,037rnproperties in January, an increase of 1 percent from December but down 20rnpercent from a year earlier. The numbers of properties taken into bankrninventory by lenders (REO) jumped 8 percent to 66,542 properties but this wasrnstill 15 percent fewer than in January 2011. </p

Brandon Moore, CEO of RealtyTracrnsaid of the numbers, “Although overall foreclosure activity was down from arnyear ago for the 16th straight month in January, we continue to seernsigns on a local and regional level that the frozen-up foreclosure process isrnbeginning to thaw.”  He noted thernincrease of activity on an annual basis in several states which he saidrnfollowed a pattern that started in late 2011. rn</p

“We expect the pattern of increasingrnforeclosures to continue in the coming months,” Moore said, “especially givenrnthe finalized mortgage and foreclosure settlement</areached in early February between 49 state attorneys general and five of thernnation's largest lenders. The settlement sets forth clear guidelines forrnlenders and servicers to follow when foreclosing, which should allow them tornpush through some of the delayed foreclosures from last year. Other roadblocksrnto foreclosure are still in place at the state level, however, includingrnlegislation altering the foreclosure process and lawsuits against lenders. Wernexpect to see somewhat uneven trends in local and regional foreclosure numbersrngoing forward as lenders work through these additional legislative and legalrnroadblocks."  </p

Several states saw an increase orrnmore than 20 percent in default notices compared to one year earlier, with hugernincreases in Maryland (100 percent) and Pennsylvania (112 percent). Otherrnstates with big increases were Florida (36 percent), Massachusetts (27rnpercent), and Connecticut (23 percent).  </p

States with big increases inrnscheduled auctions included Illinois and Indiana which were both up 141 percentrnon an annual basis, South Carolina (79 percent), Massachusetts (57 percent) andrnMinnesota (24 percent).  REO activityrnjumped in Massachusetts, up 75 percent, New Hampshire (62 percent), Indiana (60rnpercent), and Illinois (52 percent).  </p

It is difficult to draw conclusionsrnabout the state level figures however, because in some cases the base was relativelyrnsmall.   Massachusetts, for example, sawrnbig increases in all three categories of filings but even after the increasesrnforeclosure activity overall was one filing per 1,191 households, about halfrnthe national rate.  The big jumps in defaultrnnotices in Pennsylvania and Maryland were against even smaller existingrnnumbers.  In the case of Illinois,rnFlorida, and a few others of the states above the increases came in statesrnwhere rates were already devastating, in Illinois, for example, the rate is onernfiling per 369 households and in Florida one in 363.</p

The three states that have toppedrnthe list of filings for years continue to have problems but are finally improving.rn  Nevada’s filings fell by 52 percent fromrnfigures a year earlier and are now at a 52 month low with one in 198 propertiesrnaffected.  California’s activity was alsornat a multi-year low, down 23 percent from a year earlier.  Still, one in every 265 housing units wasrnsubject to a filing during the month.  InrnArizona the annual rate was down 44 percent however the state saw an uptick ofrn14 percent from December.  The rate isrnArizona is one in 325 properties.</p

Even better news; the decreases inrnall three states were driven by drops in the numbers of default notices – the firstrnstep in the foreclosure process.  InrnNevada these filings have averaged fewer than 1,200 per month since Octoberrncompared to more than 4,000 per month in the first nine months of the year andrnin California default notices were at the rate of 18,000 in December andrnJanuary compared to an average over 28,000 in the three previous months.  Arizona also saw a big drop in foreclosurernstarts which averaged 4,300 during the last two months after averaging morernthan 7,500 in the previous 12 months.</p

Other states still suffering highrnforeclosure rates are Georgia (one in 328) and Michigan (one in 354).

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