Foreclosure Activity Down for Month, Quarter, and Year

by devteam January 12th, 2012 | Share

Foreclosure activity hit its lowest level in four years in 2011, decreasing by a third from the previous year according to data released today by RealtyTrac. One in every 69 housing units in the U.S. was subject to a filing during the year, 1.45 percent of the total housing stock.   Activity also decreased for the month of December and for the fourth quarter of 2011 according to the U.S. Foreclosure Market Report covering the three periods which was released by the Irvine, California company this morning.</p

A total of 1,887,777 properties were subject to a foreclosure filing during thernyear.  This was a decrease of 34 percentrnfrom 2010 and was 33 percent below the 2009 total and 19 percent below activityrnin 2008.  Total U.S. foreclosure activity andrnthe U.S. foreclosure rate in 2011 were both at their lowest annual level sincern2007. </p

RealtyTrac,rnwhich statesrnthat its business model is to provide technology solutions and educationrnresources to facilitate buying, selling and investing in real estate, did not attribute the declining activity to an overallrnimprovement in the economy and housing market, but rather to flaws in thernforeclosure process.  Brandon Moore,rnchief executive officer of RealtyTrac said, “Foreclosures were in full delayrnmode in 2011, resulting in a dramatic drop in foreclosure activity for the year.  The lack of clarity regarding many of therndocumentation and legal issues plaguing the foreclosure industry means that wernare continuing to see a highly dysfunctional foreclosure process that isrninefficiently dealing with delinquent mortgages – particularly in states with arnjudicial foreclosure process. </p

“There were strong signsrnin the second half of 2011 that lenders are finally beginning to push throughrnsome of the delayed foreclosures in select local markets. We expect that trendrnto continue this year, boosting foreclosure activity for 2012 higher than itrnwas in 2011, though still below the peak of 2010.” </p

RealtyTracrncompiles its data by tracking documents filed in all three stages ofrnforeclosure:</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 total were also down forrnthe fourth quarter and for the month of December while activity in therncomponent data was mixed.  During thernquarter there were filings on 586,133 properties, down 4 percent from the thirdrnquarter and 27 percent from the same quarter in 2010.  Default notices were down 6 percentrnquarter-over-quarter and 22 percent year-over year while scheduled auctionsrnrose 4 percent for the quarter but were down 32 percent from Quarter 4, 2010.  REOs were down 11 percent for the quarter andrn24 percent from the same period in 2010. </p

Foreclosure activity hit a 49rnmonth low in December with foreclosure filings reported on 205,024 propertiesrnduring the month, one in every 222 units. rnThis was a decrease of 9 percent from November and was 20 percent lowerrnthan one year earlier.  Default notices decreasedrn19 percent from the previous month and were down 23 percent from December 2010;rnScheduled foreclosure auctions decreased 12 percent from the previous month andrnwere down 24 percent from December 2010; and bank repossessions (REO) increasedrn10 percent from the previous month but were still down 12 percent from Decemberrn2010.</p

The bad news dragged on for thernthree states that have topped the foreclosure charts almost from thernbeginning.  While activity was down 31rnpercent from 2010, more than 6 percent of the housing units in Nevada (one inrn16 units) had a foreclosure filing of some type during 2011.  This is the fifth year that Nevada has hadrnthe highest rate of activity in the nation. rnArizona registered the second highest rate for the third year in a row,rnwith 4.14 percent of its stock (one in 24) involved in a filing.  </p

While California dropped out of therntop three states several times during the year, it still had the nation’s thirdrnhighest rate of activity for the year with one in every 31 housing units (3.19rnpercent) subject to a filing.  Filings inrnDecember, however, were down 38 percent from the previous month.  Other states with high levels of activityrnwere Georgia, Utah, Michigan, and Florida. </p

Supporting the company’s assertion thatrnthe downturn in activity is a function of dysfunction, RealtyTrac reports thatrnforeclosures during the fourth quarter took an average of 348 days to complete,rnup from 336 days in the third quarter and 305 days in the fourth quarter ofrn2010. “The length of the average foreclosure process has increased 24 percentrnfrom 281 days in the third quarter of 2010, when lenders began to re-evaluaternforeclosure procedures in earnest as the result of the so-called robo-signingrncontroversy.”</p

The average foreclosure process inrnNew York has increased 37 percent during the same time period, and New Yorkrnproperties foreclosed in the fourth quarter took an average of 1,019 days torncomplete the foreclosure process – the longest of any state.</p

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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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