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Foreclosures

Foreclosure Filings Off Nearly 30%, RealtyTrac

On paper at least foreclosure filings fell nearly 30 percent in 2011 according to year-end figures from RealtyTrac, the nation’s leading source of foreclosure listings and data.

But the new numbers tell only part of the story. What they really demonstrate is that millions of homes remain distressed and that the foreclosure process itself continues to be troubled.

It was late in 2010 that the robo-signing scandal came to light, the practice of signing foreclosure affidavits without actually verifying that the claims were true. The result is that while most foreclosures are justified by non-payment some are not. The judicial system must now figure out how to repair improper foreclosures and — going forward — how to assure that no family is thrown out of their home without cause.

“Foreclosures were in full delay mode in 2011, resulting in a dramatic drop in foreclosure activity for the year,” said Brandon Moore, chief executive officer of RealtyTrac. “The lack of clarity regarding many of the documentation and legal issues plaguing the foreclosure industry means that we are continuing to see a highly dysfunctional foreclosure process that is inefficiently dealing with delinquent mortgages — particularly in states with a judicial foreclosure process.

“There were strong signs in the second half of 2011 that lenders are finally beginning to push through some of the delayed foreclosures in select local markets. We expect that trend to continue this year, boosting foreclosure activity for 2012 higher than it was in 2011, though still below the peak of 2010.”

Annual Results

There are two ways to view the market: properties impacted and foreclosure filings. Each measure has value as an index of marketplace activity.

Realtytrac says in 2011 that 1,887,777 U.S. properties faced foreclosure, a 34 percent decrease when compared with 2010. Foreclosure filings themselves — default notices, scheduled auctions and bank repossessions — fell almost 30 percent.

Going back to 2005, the annual foreclosure filing totals from RealtyTrac look like this:

Annual U.S. Foreclosure Filings
Year Foreclosure Filings Annual Change
2011 2,698,967 down 29.45 percent
2010 3,825,637 down 3.33 percent
2009 3,957,643 up 25.33 percent
2008 3,157,806 up 43.32 percent
2007 2,203,295 up 74.99 percent
2006 1,259,118 up 42.20 percent
2005 885,468 n.a.
Source: RealtyTrac.com
Chart Copyright 2012: OurBroker.com

In the past seven years almost 18 million foreclosure filings have been sent out. However, the actual number of impacted homes is substantially lower because borrowers often receive multiple notices for a single property.


December activity hits 49-month low, scheduled auctions up in fourth quarter

Foreclosure filings were reported on 205,024 U.S. properties in December, a decrease of 9 percent from the previous month and down 20 percent from December 2010. December’s total was the lowest monthly total since November 2007 — a 49-month low.

December Default notices (NOD, LIS) decreased 19 percent from the previous month and were down 23 percent from December 2010; Scheduled foreclosure auctions (NTS, NFS) decreased 12 percent from the previous month and were down 24 percent from December 2010; and bank repossessions (REO) increased 10 percent from the previous month but were still down 12 percent from December 2010.

Foreclosure filings were reported on 586,133 U.S. properties in the fourth quarter, a 4 percent decrease from the previous quarter and down 27 percent from the fourth quarter of 2010. Fourth quarter default notices were down 6 percent from the previous quarter and down 22 percent from the fourth quarter of 2010; scheduled foreclosure auctions increased 4 percent from the previous quarter but were still down 32 percent from the fourth quarter of 2010; and REOs decreased 11 percent from the previous quarter and were down 24 percent from the fourth quarter of 2010.

Nevada, Arizona, California post top state foreclosure rates for year

More than 6 percent of Nevada housing units (one in 16) had at least one foreclosure filing in 2011, giving it the nation’s highest state foreclosure rate for the fifth consecutive year despite a 31 percent decrease in foreclosure activity from 2010. Nevada foreclosure activity dropped 35 percent from the third quarter to the fourth quarter, driven primarily by a 70 percent decrease in default notices — the result of a new law (AB 284) that took effect in October requiring lenders to file an additional affidavit before starting the foreclosure process. The new law also increases the penalties for the use of fraudulent documents in foreclosure.

Despite a 28 percent drop in foreclosure activity from November to December — caused largely by a 41 percent drop in scheduled foreclosure auctions — Arizona registered the nation’s second highest state foreclosure rate for the third year in a row, with 4.14 percent of its housing units (one in 24) with at least one foreclosure filing in 2011.

California also experienced a substantial month-over-month drop in initial foreclosure notices in December — default notices there were down 38 percent from the previous month — but the state still registered the nation’s third highest foreclosure rate for all of 2011. One in every 31 California housing units (3.19 percent) had at least one foreclosure filing during the year, down from 4.08 percent in 2010 and 4.75 percent in 2009.

Georgia posted the nation’s fourth highest state foreclosure rate, with 2.71 percent of housing units (one in 37) with at least one foreclosure filing in 2011, and Utah posted the nation’s fifth highest state foreclosure rate, with 2.32 percent of its housing units (one in 43) with a foreclosure filing during the year.

Other states with 2011 foreclosure rates ranking among the nation’s 10 highest wereMichigan (2.21 percent), Florida (2.06 percent), Illinois (1.95 percent), Colorado (1.78 percent), and Idaho (1.77 percent).

Foreclosure processing timelines continue to increase

U.S. properties foreclosed in the fourth quarter took an average of 348 days to complete the foreclosure process, up from 336 days in the third quarter and up from 305 days in the fourth quarter of 2010. The length of the average foreclosure process has increased 24 percent from 281 days in the third quarter of 2010, when lenders began to re-evaluate foreclosure procedures in earnest as the result of the so-called robo-signing controversy.

The average foreclosure process in New York has increased 37 percent during the same time period, and New York properties foreclosed in the fourth quarter took an average of 1,019 days to complete the foreclosure process — the longest of any state.

New Jersey documented the nation’s second longest average foreclosure process, at 964 days, and Florida documented the nation’s third longest average foreclosure process, at 806 days. Foreclosure activity in both these states dropped more than 60 percent from 2010 to 2011. All three states with the longest foreclosure timelines employ the judicial foreclosure process.

Texas continued to register the shortest average foreclosure process of any state, at 90 days — still an increase from 86 days in the third quarter and from 81 days in the fourth quarter of 2010. Other states with average foreclosure process among the nation’s shortest in the fourth quarter were Delaware (106 days), Kentucky (108 days), Virginia(132 days), and Louisiana (134 days).

Top metro foreclosure rates

With 7.38 percent of its housing units (one in 14) with at least one foreclosure filing in 2011, Las Vegas posted the nation’s top foreclosure rate for the year among metropolitan statistical areas with a population of 200,000 or more.

Ten out of the top 20 metro foreclosure rates in 2011 were in California cities, led by Stockton at No. 2, with 5.43 percent of housing units (one in 18) with at least one foreclosure filing during the year. Other California cities in the top 10 were Modesto at No. 3 (5.29 percent), Vallejo-Fairfield at No. 4 (5.20 percent), Riverside-San Bernardino at No. 5 (5.16 percent), Merced at No. 7 (4.40 percent), Bakersfield at No. 9 (4.31 percent), Sacramento at No. 10 (4.17 percent), Fresno at No. 11 (3.82 percent), Visalia at No. 13 (3.67 percent), and Ventura at No. 16 (3.27 percent).

Other metro areas with foreclosure rates ranking among the top 20 were Phoenix at No. 6 (5.10 percent); Reno, Nev., at No. 8 (4.37 percent); Atlanta at No. 12 (3.69 percent); Prescott, Ariz., at No. 14 (3.50 percent); Cape Coral-Fort Myers, Fla., at No. 15 (3.29 percent); Greeley, Colo., at No. 17 (2.97 percent); Detroit at No. 18 (2.94 percent); Boise, Idaho, at No. 19 (2.85 percent); and Salt Lake City at No. 20 (2.81 percent).

All top 20 metro areas showed a decrease in foreclosure activity from 2010, and all butAtlanta posted a decrease from 2009. Atlanta metro foreclosure activity in 2011 was up 2 percent from 2009.

 

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October Foreclosure Activity Down 31 percent, Says RealtyTrac

Foreclosure activity remains hounded by robo-signing disputes. The result is that October foreclosure filings were down 31 percent when compared with a year ago according to RealtyTracthe leading online marketplace for foreclosures. The company said that foreclosure filings for October — default notices, scheduled auctions and bank repossessions – were reported on 230,678 U.S. properties in October, down nearly 31 percent from October 2010.  

“The October foreclosure numbers continue to show strong signs that foreclosure activity is coming out of the rain delay we’ve been in for the past year as lenders corrected foreclosure paperwork and processing problems,” said James Saccacio, chief executive officer of RealtyTrac. “However, recent state court rulings and new state laws keep changing the rules of the foreclosure game on the fly, creating more uncertainty in the housing market and threatening to prolong the road to a robust real estate recovery.”

There is no evidence that the robo-signing scandal which is slowing the foreclosure process will come to a sudden halt anytime soon. For instance,  state regulators are attempting yo work out a universal settlement with lenders and services that reportedly includes compensation of $20 to $25 billion. Such an agreement, however, also has to deal with possible civil and criminal cases that might also be allowed against institutions and individuals in the future. The liability question is a major sticking point.

Foreclosure Activity by Type

Default notices (NOD, LIS) were filed for the first time on a total of 77,733 U.S. properties in October, a 10 percent increase from September, but still down 23 percent from October 2010. Default notices in states using the judicial process (LIS) reached an 11-month high of 39,282 in October, a 16 percent increase from the previous month, but still down 31 percent from October 2010.

Default notices increased more than 25 percent on a month-over-month basis in several states, including Florida (28 percent), Pennsylvania (50 percent) and Indiana (61 percent). Despite the sizable monthly increases, default notices were down on a year-over-year basis in all three of these states.

Foreclosure auctions (NTS, NFS) were scheduled on 85,321 U.S. properties in October, up 8 percent from the previous month, but still down 38 percent from October 2010. Scheduled auctions in states using the judicial foreclosure process (NFS) reached an 11-month high of 25,941 in October, a 22 percent increase from the previous month, but still down 43 percent from October 2010.

Scheduled auctions increased more than 35 percent on a month-over-month basis in several states, including Florida (57 percent), Minnesota (43 percent) and Illinois (38 percent), although scheduled auctions in all three of those states were still down from October 2010.

Lenders repossessed a total of 67,624 U.S. properties (REO) in October, a 4 percent increase from the previous month, but still a 27 percent decrease from October 2010. REO activity increased 40 percent or more on a month-over-month basis in several states, including Michigan (40 percent), Oregon (45 percent), New Jersey (48 percent), and Indiana (73 percent).

Nevada, California, Arizona post top state foreclosure rates

Despite a 34 percent month-over-month drop in foreclosure activity, Nevada posted the nation’s highest state foreclosure rate for the 58th straight month in October. One in every 180 Nevada housing units had a foreclosure filing during the month, still more than three times the national average despite the drop-off in activity. The month-over-month decrease in Nevada was driven by a 75 percent monthly decrease in new default notices, likely the result of a new law that as of took effect in October and requires foreclosing lenders to sign and record in public records an affidavit with key information about anythe foreclosure on it. The 1,201 new defaults in Nevada in October was the lowest since June2006, a 64-month low.

California default notices increased 17 percent from the previous month to a 13-month high, helping the state post the nation’s second highest foreclosure rate: one in every 243 housing units with a foreclosure filing in October. A total of 29,240 default notices were reported in California in October, a 1 percent increase from October 2010 — the first year-over-year increase in defaults in California since November 2009.

Arizona posted the nation’s third highest state foreclosure rate in October: one in every 259 housing units with a foreclosure filing during the month. Total foreclosure activity inArizona increased nearly 18 percent from the previous month, but was still down 36 percent from October 2010.

A sharp monthly increase in new default notices and scheduled auctions boosted theforeclosure rate in Florida to fourth highest among the states, up from sixth highest in September. A total of 15,234 new default notices were reported in Florida in October, up 28 percent from the previous month and a 12-month high. Scheduled auctions in Floridahit an 11-month high in October, with 10,655 reported during the month — up 57 percent from September.

New default notices in Michigan also reached a 12-month high in October, increasing 13 percent from the previous month, and the state posted the nation’s fifth highest foreclosure rate for the month: one in every 282 housing units with a foreclosure filing.

The top five states in terms of foreclosure rate in October — Nevada, California, Arizona,Florida and Michigan — accounted for 53 percent of the national total for the month.

Other states with foreclosure rates ranking among the top 10 were Georgia, Illinois,Idaho, Oregon and Colorado.

Las Vegas knocked out of No. 1 spot for foreclosure rates among metro areas

After 22 consecutive months with the highest foreclosure rate among metropolitan areas with a population of 200,000 or more, Las Vegas dropped to No. 5 on the list in October thanks to a 36 percent decrease in foreclosure activity from the previous month. The overall decrease in Las Vegas was caused primarily by an 80 percent drop in new default notices from September to October. One in every 162 Las Vegas housing units had a foreclosure filing in October, still more than three times the national average.

With one in every 143 housing units with a foreclosure filing in October, Stockton, Calif., took the top metro foreclosure rate away from Las Vegas. Foreclosure activity in Stocktonincreased 10 percent from the previous month, but was still down nearly 18 percent from October 2010. New defaults in Stockton were up 20 percent from the previous month and up 9 percent from October 2010.

Five other California metro areas had foreclosure rates that ranked among the top 10 inOctober. Modesto was close behind Stockton at No. 2 (one in every 148 housing units with a foreclosure filing), followed by Vallejo-Fairfield at No. 3 (one in every 150 housing units), Riverside-San Bernardino at No. 4 (one in every 155 housing units), Sacramento at No. 7 (one in every 176 housing units), and Merced at No. 9 (one in every 200 housing units).

Other metro areas with foreclosure rates in the top 10 were Saginaw, Mich., at No. 6 (one in every 174 housing units), Cape Coral-Fort Myers, Fla., at No. 8 (one in every 190 housing units), and Orlando, Fla., at No. 10 (one in every 208 housing units).

 

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Foreclosure Discount Gets Bigger & Bigger

Buy low and sell high is a traditional real estate investing strategy and with good reason: Unlike the stock market you can’t sell homes short and make a dime.

Thus it makes considerable sense to buy property at the lowest possible price and that brings us to RealtyTrac’s foreclosure report for the second quarter:

“The average sales price for homes in foreclosure or bank owned was 32 percent below the average sales price of homes not in foreclosure,” said RealyTrac.

A year ago, in the second quarter of 2010, the company reported that the foreclosure discount was 26 percent.

You can also see something else: The percent of all sales which are distressed has risen from 24 percent last year to 31 percent in the second quarter of 2011.

These numbers are hard to ignore. They tell us that massive numbers of homes facing foreclosure or which have been foreclosed remain available at discount.

National Association of Realtors

The National Association of Realtors reported for July that by its measure “distressed homes — foreclosures and short sales typically sold at deep discounts — accounted for 29 percent of sales in July, compared with 30 percent in June and 32 percent in July 2010.”

Okay, so how much is a “deep discount.” According to NAR spokesman Walter Molony a typical distressed sale price is roughly 20 percent lower than the price for a home which is not facing foreclosure or was not lender-owned.

The enormous gulf between distressed homes and the rest of the housing stock raises several questions:

First, why buy a home at a retail price when discounts are widely and plainly available? The answer may well be that it’s often difficult and time-consuming to deal with lenders. That said, a 32-percent discount is quite a reward for patience and persistence.

Second, where is the mortgage money? Rates have recently been at a 50-year low, something which should encourage borrowing and yet large numbers of distressed homes are bought for cash — NAR says cash purchases in July accounted for 29 percent of all existing home sales.

It’s obvious that lenders are awash in both cash and real estate — otherwise rates would be higher and distressed sales would be a smaller percent of the market. If lenders want to get rid of the shadow inventory which threatens their stability and holds down home prices nationwide it’s clear that they need to readily finance the purchase of distressed homes to investors and home buyers with 10 percent down, a verified income and an ongoing pulse.

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Distressed Homes Selling at 32% Discount

If you want to pay less for a home then look for distressed property, the homes which are facing foreclosure or will be foreclosed. Why? They’re selling nationwide with a 32-percent mark-down.

Such properties can be found. If you’re buying a home in the U.S. the odds are 3 in 1 that the property you purchase will be distressed and selling at discount.

These are the central findings from the latest quarterly report from RealtyTrac, the nation’s leading source of foreclosure listings and data.

Results for the second quarter of 2011 show that:

  • Properties in some stage of foreclosure or bank owned accounted for 31 percent of all U.S. residential sales. This is up substantially from the 24 percent seen a year ago.
  • Distressed homes typically sold at 32 percent below the average sales price of homes not in foreclosure.
  • Buyers purchased 265,087 homes in foreclosure or bank owned nationwide in the second quarter, down 11 percent from the second quarter of 2010. This smaller number of purchases reflects the fact that in many jurisdictions foreclosure actions have slowed because of court decisions, new state rules, and paperwork worries. In effect, the robo-signing scandal continues to impact the marketplace.

“With average prices on distressed real estate trending down and average discounts trending up, this report is clearly good news for well-positioned buyers and investors looking for bargain real estate,” said James Saccacio chief executive officer of RealtyTrac.

“Maybe less evident, however, is the good news in this report for distressed homeowners looking to sell, and even lenders saddled with large portfolios of delinquent loans.

“The jump in pre-foreclosure sales volume coupled with bigger discounts on pre-foreclosures and a shorter average time to sell pre-foreclosures all point to a housing market that is starting to focus on more efficiently clearing distressed inventory through more streamlined short sales — at least in some areas,” Saccacio continued.

“This gives distressed homeowners who do not qualify for loan modification or refinancing — or who are not interested in those options and want to sell — a better chance of completing a short sale to avoid foreclosure. Streamlined short sales also give lenders the opportunity to more pre-emptively purge non-performing loans from their portfolios and avoid the long, costly and increasingly messy process of foreclosure and the subsequent sale of an REO — which may end up selling for a lower price than it would have as a pre-foreclosure short sale and in the meantime further stresses already overloaded REO departments.”

Also from the RealtyTrac report:

Metros with biggest foreclosure discounts

Among metropolitan statistical areas with at least 100 foreclosure-related sales during the second quarter, the Louisville, Ky., metro area posted the biggest foreclosure discount. Third parties purchased a total of 527 homes in foreclosure or bank owned in the metro area during the quarter at an average sales price of $85,211 — 54 percent below the average sales price of non-foreclosure homes.

The Sebastian-Vero Beach metro area in Florida documented an average foreclosure-related sales price of $97,175, a 53 percent discount, and the Saginaw, Mich., metro area documented an average foreclosure-related sales price of $48,977, also a 53 percent discount.

Other metro areas with a foreclosure discount of 50 percent or more were Milwaukee (51 percent), Pittsburgh (51 percent), and Kalamazoo, Mich. (50 percent).

Pre-foreclosure sales jump 19 percent, bank-owned sales flat

A total of 102,407 pre-foreclosure homes — in default or scheduled for auction — sold to third parties in the second quarter, an increase of 19 percent from the previous quarter but still down 12 percent from the second quarter of 2010. Pre-foreclosure sales accounted for 12 percent of all sales, the same percentage as in the first quarter but up from 10 percent of all sales in the second quarter of 2010.

Some of the states with the biggest quarterly increases in pre-foreclosure home sales included Nevada with a 43 percent increase, Washington with a 39 percent increase, California with a 38 percent increase, and Texas with a 34 percent increase.

Pre-foreclosures, which are often sold via short sale, had an average sales price nationwide of $192,129, a discount of 21 percent below the average sales price of non-foreclosure homes. That discount was up from a 17 percent discount in the previous quarter and a 14 percent discount in the second quarter of 2010. Pre-foreclosures sold in the second quarter took an average of 245 days to sell after receiving the initial foreclosure notice, down from an average of 256 days in the first quarter — following three straight quarters of increases in the average time to sell pre-foreclosures.

A total of 162,680 bank-owned (REO) homes sold to third parties in the second quarter, virtually unchanged from the 162,900 in the first quarter and down 10 percent from the second quarter of 2010. REO sales accounted for 19 percent of all sales in the second quarter, down from 23 percent of all sales in the first quarter but up from 15 percent of all sales in the second quarter of 2010.

Nationally, REOs had an average sales price of $145,211, a discount of nearly 40 percent below the average sales price of non-foreclosure homes. This is an increase from a 36 percent discount in the previous quarter and a 34 percent discount in the second quarter of 2010. REOs that sold in the second quarter took an average of 178 days to sell after being foreclosed on, up from 176 days in the first quarter and up from 164 days in the second quarter of 2010.

Nevada, Arizona, California post highest percentage of foreclosure sales

Foreclosure-related sales accounted for 65 percent of all residential sales in Nevada during the second quarter, the highest percentage of any state. Third parties purchased a total of 15,685 homes in foreclosure or bank owned in Nevada during the second quarter, up 24 percent from the first quarter and up 31 percent from the second quarter of 2010.

Arizona foreclosure-related sales also increased on a quarterly and annual basis, accounting for 57 percent of all sales in the state during the second quarter — the second highest percentage of any state.

Third parties purchased a total of 69,897 homes in foreclosure or bank owned in California during the second quarter, 51 percent of all sales in the state. Foreclosure-related sales in California increased 12 percent from the first quarter but were virtually unchanged from the second quarter of 2010.

Michigan foreclosure-related sales accounted for 41 percent of all sales in the state during the second quarter, the fourth highest percentage among the states, and Georgia foreclosure-related sales accounted for 38 percent of all sales in the state during the second quarter, the fifth highest percentage.

Other states where foreclosure-related sales accounted for at least 30 percent of all sales were Colorado (36 percent), Florida (35 percent), Illinois (34 percent), Oregon (33 percent), and Idaho (30 percent).

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RealtyTrac: Metro Foreclosure Activity Stifled By Paperwork Jam

Foreclosure filings were down 84 percent during the first half of 2011 according to RealtyTrac, a sign that might normally be seen as good news. But as with so much else regarding mortgages and the foreclosure mess, the real story should be cause for concern.

RealtyTrac reports that 178 of the nation’s 211 metropolitan areas with a population of 200,000 or more saw foreclosure activity decline. In fact what’s really happening is that the foreclosure process is stalled across the country as courts increasing check lender paperwork claims.

Foreclosure activity started to slow late in 2010 as a result of the robo-signing scandal, cases where lenders improperly or incorrectly made foreclosure claims in local courts. A problem that was supposed to go away in a few weeks or months has stayed and arguably gotten worse. Indeed, Reuters reports that lenders continue to engage in robo-signing almost nine months after the problem became public.

In other words, foreclosure numbers are down because lender paperwork is screwed up. Once the filings are correct, then foreclosure activity will resume, the numbers will rise, and home values will take a substantial hit. 

 This assumes the paperwork CAN be corrected, not a sure thing at this point.

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Foreclosed Homes for Less Than $100,000

The latest quarterly figures are in and it’s not great news on the real estate front: According to RealtyTrac, distressed real estate accounts for 28 percent of all existing home sales in the first quarter. No less important, the typical foreclosure discount was 27 percent lower than homes not in foreclosure.

Combine falling home prices with massive discounts and some interesting numbers emerge:

  • Foreclosed homes costing less than $100,000 on average were available in Iowa ($97,339), Michigan ($70,358), Ohio ($75,397) and Oklahoma ($93,013).
  • The average foreclosure discount was 40.90 percent in Illinois, 41.14 percent in Ohio and 39.02 percent in Kentucky.
  • If you buy a REO — real estate owned by a lender — you might want to look at New York state where the typical discount is 53.46 percent. That’s right folks, step right up, get your real estate at half off.
  • There is no foreclosure discount in either Montana or Utah. Foreclosed properties in those states are actually priced above non-foreclosed properties. The premium is 4.97 percent in Montana and 1.59 percent in Utah.

“While foreclosure sales continue to account for an unusually high percentage of all residential home sales, sales volume is well off the peak we saw in the first quarter of 2009, when nearly 350,000 foreclosure properties sold to third parties,” said James J. Saccacio, chief executive officer of RealtyTrac. “While this is probably helping to keep home prices relatively stable, it is also delaying the housing recovery. At the first quarter foreclosure sales pace, it would take exactly three years to clear the current inventory of 1.9 million properties already on the banks’ books, or in foreclosure.”

Also from RealtyTrac:

Foreclosure sales by type

A total of 107,143 bank-owned (REO) residential properties sold to third parties in the first quarter, down 11 percent from the previous quarter and down nearly 30 percent from the first quarter of 2010. REO sales accounted for nearly 19 percent of all sales in the first quarter, up from 17 percent of all sales in the previous quarter and up from 18 percent of all sales in the first quarter of 2010. REOs sold for an average discount of 35 percent, the same discount as in the previous quarter and up from an average discount of 33 percent in the first quarter of 2010.

A total of 51,291 pre-foreclosure properties — in default or scheduled for auction — sold to third parties in the first quarter, down nearly 26 percent from the previous quarter and down 45 percent from the first quarter of 2010. Pre-foreclosure sales accounted for nearly 9 percent of all sales, down from 10 percent of all sales in the fourth quarter of 2010 and down from 11 percent of all sales in the first quarter of 2010. Pre-foreclosure sales, which are often short sales, sold for an average discount of 9 percent, down from an average discount of 13 percent in the fourth quarter and an average discount of 14 percent in the first quarter of 2010.

Nevada, California, Arizona post highest percentage of foreclosure sales

Foreclosure sales accounted for 53 percent of all residential sales in Nevada during the first quarter, the highest percentage of any state but down from nearly 54 percent of all sales in the previous quarter and down from 59 percent of all sales in the first quarter of 2010. The average foreclosure sales price in Nevada during the first quarter was nearly 18 percent below the average sales price of homes not in foreclosure. Bank-owned properties that sold in the first quarter had been repossessed by the bank an average of 130 days prior to sale, while properties that sold in the earlier stages of foreclosure were in foreclosure an average of 135 days before selling.

California foreclosure sales accounted for 45 percent of all residential sales in the state during the first quarter, up from 43 percent of all sales in the fourth quarter but down from nearly 48 percent of all sales in the first quarter of 2010. The average foreclosure sales price in California was nearly 34 percent below the average sales price of homes not in foreclosure. California bank-owned properties that sold in the first quarter had been repossessed by the bank an average of 164 days prior to sale, while properties that sold in the earlier stages of foreclosure were in foreclosure an average of 156 days before selling.

Foreclosure sales also accounted for 45 percent of all residential sales in Arizona during the first quarter, down from 50 percent of all sales in the previous quarter and down from nearly 47 percent of all sales in the first quarter of 2010. Arizona bank-owned properties that sold in the first quarter had been repossessed by the bank an average of 129 days prior to the sale, while properties that sold in the earlier stages of foreclosure were in foreclosure an average of 176 days before selling.

Other states where foreclosure sales accounted for at least one-quarter of all sales were Idaho (33 percent), Florida (32 percent), Michigan (32 percent), Oregon (32 percent), Virginia (30 percent), Colorado (30 percent), Illinois (29 percent), Georgia (27 percent) and Ohio (25 percent).

Ohio, Illinois, Kentucky post highest foreclosure discounts

Ohio foreclosures sold for an average discount of 41 percent in the first quarter, the biggest discount percentage of any state. Ohio’s average foreclosure discount was down slightly from 42 percent in the previous quarter but up slightly from 40 percent in the first quarter of 2010.

The average foreclosure discount in Illinois was nearly 41 percent in the first quarter, up from an average discount of 38 percent in both the previous quarter and the first quarter of 2010.

Kentucky foreclosures sold for an average discount of 39 percent, down from an average discount of 42 percent in the fourth quarter but up from an average discount of 37 percent in the first quarter of 2010.

Other states with average foreclosure discounts of more than 35 percent were Maryland, Tennessee, Wisconsin, Delaware, Pennsylvania, Oklahoma and Louisiana.

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Robo-signing scandal slows mortgage loan foreclosures

For the third time in three months foreclosure filings fell below the 300,000 mark. While this may sound like good news, it’s actually a by-product of the ongoing robo-signing scandal.

“We’ve now seen three straight months with fewer than 300,000 properties receiving foreclosure filings, following 20 straight months where the total exceeded 300,000,” said James J. Saccacio, chief executive officer of RealtyTrac. “Unfortunately this is less a sign of a robust housing recovery and more a sign that lenders have become bogged down in reviewing procedures, resubmitting paperwork and formulating legal arguments related to accusations of improper foreclosure processing.”

Florida

One of the more unusual findings from RealtyTrac was that “no Florida cities showed up in the top 20 metro foreclosure rates in January. In contrast the state accounted for nine of the top 20 metro foreclosure rates in 2010.”

Foreclosure filings in Florida have been severely impacted by lender shortcuts. The very real recordation problems faced by Floridians could spread to other states, slowing down foreclosure actions but raising significant title questions.

According to the Office of Florida’s Attorney General, “We are finding as part of our investigation into foreclosure mills and ancillary businesses that

  • “Executed affidavits of indebtedness have been filed in support of summary judgment.
  • “Records of assignments of mortgages are hopelessly lost resulting in corrective assignments that are sometimes filed even after the foreclosure sale has occurred.
  • “Initially some title companies were reluctant to issue title insurance on foreclosed properties and may be reluctant to do so again because of the following recent decision.”

Here’s more from RealtyTrac:

Foreclosure Activity by Type

A total of 75,198 U.S. properties received default notices (NOD, LIS) in January, a 1 percent decrease from the previous month and a 27 percent decrease from January 2010 — the 12th straight month where default notices decreased on a year-over-year basis. January was also the fourth straight month where default notices decreased on a month-over-month basis, giving it the lowest monthly total for default notices since July 2007.

Default notices in states with a non-judicial foreclosure process (NOD) increased less than 1 percent from the previous month but were down 8 percent from January 2010, while default notices in states with a judicial foreclosure process (LIS) decreased 2 percent from December and were down 39 percent from January 2010.

Foreclosure auctions (NTS, NFS) were scheduled for the first time on a total of 108,002 U.S. properties in January, a 4 percent decrease from the previous month and a 13 percent decrease from January 2010. It was the lowest monthly total for scheduled foreclosure auctions since February 2009.

Scheduled non-judicial foreclosure auctions (NFS) decreased 1 percent from December and were down 3 percent from January 2010, while scheduled judicial foreclosure auctions (NTS) decreased 14 percent from the previous month and were down 39 percent from January 2010.

Lenders foreclosed on 78,133 U.S. properties in January, up 12 percent from the previous month but still down 11 percent from January 2010. Bank repossessions (REO) in non-judicial foreclosure states increased 23 percent from December but were still down 9 percent from January 2010, while bank repossessions in judicial foreclosure states decreased 7 percent from the previous month and were down 16 percent from January 2010.

Nevada, Arizona, California post top state foreclosure rates

Nevada bank repossessions increased 16 percent from the previous month, helping the state maintain the nation’s highest state foreclosure rate for the 49th straight month — despite month-over-month decreases in default notices and scheduled auctions. One in every 93 Nevada housing units received a foreclosure filing in January — more than five times the national average.

One in every 175 Arizona housing units received a foreclosure filing in January, the nation’s second highest state foreclosure rate. Arizona foreclosure activity increased 16 percent from the previous month — driven by a 54 percent month-over-month increase in REOs — but was still down 25 percent from January 2010.

California REO activity increased 32 percent from the previous month, and the state posted the nation’s third highest state foreclosure rate, with one in every 200 housing units receiving a foreclosure filing.

Idaho posted the nation’s fourth highest state foreclosure rate, with one in every 241 housing units receiving a foreclosure filing, while Utah posted the nation’s fifth highest state foreclosure rate, with one in every 265 housing units receiving a foreclosure filing during the month.

Other states with foreclosure rates ranking among the top 10 in January were Michigan, Georgia, Illinois, Florida and Colorado.

Five states account for more than 50 percent of national total

With 67,072 properties receiving a foreclosure filing, California accounted for more than 25 percent of the national total in January. After hitting a 25-month low in November, California foreclosure activity has increased on a month-over-month basis for two straight months.

Florida foreclosure activity decreased on a month-over-month basis for the fourth straight month, but the state’s 21,671 properties receiving a foreclosure filing in January — a 42-month low — was still the second highest in the nation.

Michigan foreclosure activity increased for the second straight month, and the state posted the nation’s third highest total, with 16,716 properties receiving a foreclosure filing in January.

Arizona posted the nation’s fourth highest total, with 15,757 properties receiving a foreclosure filing, whileTexas posted the nation’s fifth highest total, with 14,897 properties receiving a foreclosure filing during the month.

Other states with foreclosure activity totals among the nation’s 10 highest in January were Illinois (13,164), Georgia (12,772), Nevada (12,263), Ohio (8,924) and New Jersey (5,526).

Top 10 metro rates in Nevada, California, Arizona, while Florida metros drop

With one in every 82 housing units receiving a foreclosure filing in January, the Las Vegas-Paradise, Nev., metro area maintained the nation’s highest foreclosure rate among metropolitan areas with a population of 200,000 or more. Las Vegas foreclosure activity decreased nearly 13 percent from the previous month and increased less than 1 percent from January 2010.

The other Nevada metro area in the top 10 was Reno-Sparks, at No. 5 with one in every 132 housing units receiving a foreclosure filing.

Seven California metro areas posted foreclosure rates in the top 10, led by Modesto, at No. 2 with one in every 111 housing units receiving a foreclosure filing; Stockton, at No. 3 with one in every 114 housing units receiving a foreclosure filing; and Riverside-San Bernardino-Ontario, at No. 4 with one in every 120 housing units receiving a foreclosure filing. Other California metro areas with foreclosure rates in the top 10 were Vallejo-Fairfield at No. 6 (one in 135 housing units); Bakersfield at No. 7 (one in 143); Merced at No. 9 (one in 149); and Sacramento-Arden-Arcade-Roseville at No. 10 (one in 151). Sacramento was the only California metro area in the top 10 to report increasing foreclosure activity on a month-over-month and year-over year basis.

With one in every 143 housing units receiving a foreclosure filing in January, the Phoenix-Mesa-Scottsdale metro area posted the nation’s eighth highest metro foreclosure rate.

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2010 foreclosure activity soars in metro areas

The latest quarterly report from RealtyTrac.com shows that 2010 foreclosure activity increased in 149 or the nation’s 206 largest metro areas when compared with 2009. The firm also reported that the 10 highest foreclosure rates all posted decreasing foreclosure activity from 2009 and six of the top 10 also posted decreasing foreclosure activity from 2008.

“Foreclosure floodwaters receded somewhat in 2010 in the nation’s hardest-hit housing markets,” said James J. Saccacio, chief executive officer of RealtyTrac. “Even so, foreclosure levels remained five to 10 times higher than historic norms in most of those hard-hit markets, where deep faultlines of risk remain and could potentially trigger more waves of foreclosure activity in 2011 and beyond. Meanwhile foreclosures became more widespread in 2010 as high unemployment drove activity up in 72 percent of the nation’s metro areas — many of which were relatively insulated from the initial foreclosure tsunami.”

In fact, the situation is actually worse than the numbers show.

The Bigger Numbers To Come

To understand why you need to look at the fourth quarter of 2010. It was during this period that the robo-signing scandal began to emerge. The result was that foreclosure activity by a number of major lenders was halted in 23 states and some lenders went further and declared national moratoriums.

However, the purpose of these foreclosure freezes was NOT to stop foreclosures. Instead, it was to review the paperwork and assure that renewed foreclosure claims would not include inaccurate claims and falsified paperwork. These claims will be back, one reason 2011 is likely to be a worse year in terms of foreclosure activity than 2010.

However, foreclosure activity in many areas would have been far greater if the robo-signing moratoriums had not taken place. This means more than 149 metro areas would have seen increases in foreclosure activity and some of the 57 areas which saw declines would have shifted over into the increased-activity category or had smaller declines.

Below is further information from RealtyTrac.

California, Florida, Nevada and Arizona cities accounted for 19 of the top 20 metro foreclosure rates, with Boise City-Nampa, Idaho the lone exception at No. 20. Boise also was one of only three metros in the top 20 where foreclosure activity increased from 2009, along with the Florida metro areas of Deltona-Daytona Beach-Ormond Beach at No. 13 and Tampa-St. Petersburg-Clearwater at No. 17.

“Foreclosure floodwaters receded somewhat in 2010 in the nation’s hardest-hit housing markets,” said James J. Saccacio, chief executive officer of RealtyTrac. “Even so, foreclosure levels remained five to 10 times higher than historic norms in most of those hard-hit markets, where deep faultlines of risk remain and could potentially trigger more waves of foreclosure activity in 2011 and beyond. Meanwhile foreclosures became more widespread in 2010 as high unemployment drove activity up in 72 percent of the nation’s metro areas — many of which were relatively insulated from the initial foreclosure tsunami.”

Top 10 metro foreclosure rates

Las Vegas-Paradise continued to post the nation’s highest metro foreclosure rate, with one in every 9 housing units (10.88 percent) receiving a foreclosure filing in 2010 — nearly five times the national average. A total of 88,198 Las Vegas-area properties received a foreclosure filing in 2010, a decrease of 7 percent from 2009 but still up 31 percent from 2008.

Despite decreasing foreclosure activity from both 2009 and 2008, Cape Coral-Fort Myers, Fla., documented the nation’s second highest metro foreclosure rate, with one in every 12 housing units (8.40 percent) receiving a foreclosure filing in 2010. A total of 30,660 properties in the metro area received a foreclosure filing in 2010, down 28 percent from 2009 and down 25 percent from 2008.

Modesto, Calif., also reported a decrease in foreclosure activity from 2009 and 2008, but the metro area still posted the nation’s third highest metro foreclosure rate with one in every 14 housing units (7.34 percent) receiving a foreclosure filing in 2010.

Along with Cape Coral-Fort Myers and Modesto, four other metro areas with foreclosure rates in the top 10 also reported two-year decreases in foreclosure activity: No. 6 Riverside-San Bernardino-Ontario, Calif., where foreclosure activity was down nearly 20 percent from 2009 and nearly 10 percent from 2008; No. 7 Stockton, Calif., where foreclosure activity was down nearly 19 percent from 2009 and nearly 25 percent from 2008; No. 8 Merced, Calif., where foreclosure activity was down nearly 31 percent from 2009 and 30 percent from 2008; and No. 10 Vallejo-Fairfield, Calif., where foreclosure activity was down 12 percent from 2009 and 3 percent from 2008.

Other metro areas with foreclosure rates in the top 10 were Phoenix-Mesa-Scottsdale at No. 4 (7.27 percent); Miami-Fort Lauderdale-Pompano Beach at No. 5 (7.08 percent); and Orlando-Kissimmee at No. 9 (6.86 percent).

Trends in 20 largest metro areas

Foreclosure activity trends were evenly split in the nation’s 20 largest metro areas, with 10 of those metro areas showing decreasing foreclosure activity from 2009, and 10 showing increasing foreclosure activity from 2009. Foreclosure activity increased 26 percent from 2009 in Houston-Sugar Land-Baytown, Texas, the biggest increase among the 20 largest metro areas, followed by Seattle-Tacoma-Bellvue, Wash., with a nearly 23 percent increase, and Atlanta-Sandy Springs-Marietta, Ga., with a nearly 21 percent increase.

The Washington, D.C., metro area posted the biggest decrease in foreclosure activity from 2009 among the nation’s 20 largest metro areas, down 22 percent, followed by three Southern California metro areas: Riverside-San Bernardino-Ontario, with a 20 percent decrease; San Diego-Carlsbad-San Marcos, with a 17 percent decrease; and Los Angeles-Long Beach-Santa Ana, with a 16 percent decrease.

Metros with most bank repossessions

The Phoenix-Mesa-Scottsdale metro area reported 55,372 bank repossessions (REO) in 2010, the most of any metro area and up 17 percent from 2009. The Chicago-Naperville-Joliet metro area reported 45,555 REOs in 2010, the second most of any metro area and an increase of nearly 20 percent from 2009, and the Detroit-Warren-Livonia metro area reported 43,541 REOs in 2010, the third most of any metro area and up 19 percent from 2009,

Other metros in the top five for most REOs in 2010 were Miami-Fort Lauderdale-Pompano Beach, with 42,630 bank repossessions, and Atlanta-Sandy Springs-Marietta, with 38,535. All five metro areas in the top five posted increasing REO activity from 2009.

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Can I Get A Foreclosure Mortgage?

If you’re interested in buying foreclosed real estate there are mortgages out there for you. In fact, a possible source of a foreclosure mortgage is the very lender selling the foreclosed property.

In terms of financing, real estate is real estate. The fact that it’s a foreclosure, distressed property or home for sale under normal conditions makes no difference. The important point is that the economic sins of the last owner do not transfer to the new one. What matters is that at the time of financing the property has good, marketable and insurable title and that it also has a given market value.

Once the value of a foreclosed property has been determined through a sale agreement or appraisal, whichever is less, the real estate can then be financed in the same way as any other property.

There is, however, one difference with foreclosed properties which should be of interest to would-be buyers: In some cases lenders will finance the sale of the properties they’re selling.

Leverage

This is both good news and not-so-good news. The good news is that the lender is one more source of financing in addition to all the other mortgage sources that are out there. The not-so-good news is that the willingness of the lender to finance the sale may bring in other bidders and it may stiffen the lender’s negotiation stance.

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Mortgage loan foreclosures slowed by robo-signing scandal

It turns out that the robo-signing mess was not such a minor manner, a mere paperwork slip that can be easily corrected. The latest figures from RealtyTrac show that foreclosure activity dropped substantially in November, reaching the lowest level since November 2008.

Foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 262,339 U.S. properties in November, down 21 percent from October and off 14 percent from a year ago.

Both the 21 percent month-over-month decrease and 14 percent year-over-year decrease in foreclosure activity were the highest drops recorded since RealtyTrac began publishing the U.S. Foreclosure Report in January 2005, according to the company.

“Foreclosure activity decreased dramatically in November, with fewer than 300,000 properties receiving a foreclosure notice for the first time since February 2009,” said James J. Saccacio, chief executive officer at RealtyTrac. “While part of the decrease can be attributed to a seasonal drop of 7 to 10 percent that typically occurs in November, fallout from the foreclosure robo-signing controversy forced lenders and servicers to hit the pause button on many foreclosures while they scrambled to revamp their internal procedures and revise or resubmit questionable paperwork.”

Uncertain Future

The catch is what happens next. Seasonal declines are, well, seasonal. Reductions in foreclosure activity related to the robo-signing scandal may result in no more than temporary stumbles. Once robo-related delays taper-off or end, then monthly foreclosure numbers could again climb.

Alternatively, there is a minimum, implausible, very unlikely possibility that the paperwork system is so botched up that for various reasons lenders on a large scale will not be able to show they actually own huge numbers of mortgage notes and therefore have no standing to foreclose.

As an example, there is the reported case of Colorado homeowner Margaret Sadler. A court dismissed an effort to foreclose when the lender was unable to show it was the real party in interest. (See photo at top. Also see the Mortgage Servicing Fraud Forum.)

RealtyTrac also released the following data:

Foreclosure Activity by Type

A total of 78,955 U.S. properties received default notices (NOD, LIS) in November, a 21 percent decrease from the previous month and a 31 percent decrease from November 2009 — the 10th straight annual decrease in default notices. November’s default notices total was the lowest since July 2007.

Default notices in states that practice judicial foreclosures (called Lis Pendens filings) decreased 31 percent from the previous month and were down 43 percent from November 2009. Meanwhile non-judicial default notices (NOD) decreased 9 percent from the previous month and were down 12 percent from November 2009.

Foreclosure auctions (NTS, NFS) were scheduled for the first time on a total of 115,956 U.S. properties in November, a 16 percent decrease from the previous month and unchanged from November 2009. Scheduled judicial foreclosure auctions (NFS) decreased 34 percent from the previous month and were down 12 percent from November 2009, while scheduled non-judicial foreclosure auctions (NTS) decreased 7 percent from the previous month but increased 5 percent from November 2009. 

Lenders foreclosed on 67,428 U.S. properties in November, down 28 percent from the previous month and down 12 percent from November 2009. Bank repossessions (REOs) decreased month-over-month in 37 states and the District of Columbia. November’s REO total was the lowest since May 2009, but November’s numbers pushed the year-to-date 2010 REO total to more than 980,000 — already above the record year-end total for 2009.

Nevada, Utah, California post top state foreclosure rates
Despite a 20 percent monthly decrease in foreclosure activity, Nevada posted the nation’s highest state foreclosure rate for the 47th straight month. One in every 99 Nevada housing units received a foreclosure filing in November — nearly five times the national average.

Thanks in part to sharp monthly drops in foreclosure activity in Arizona, Florida, California and Michigan, Utah’s foreclosure rate leapfrogged to second highest among the states in November after being sixth highest the previous month. One in every 221 Utah housing units received a foreclosure notice during the month — more than twice the national average.

With one in every 233 housing units receiving a foreclosure filing in November, California posted the nation’s third highest foreclosure rate despite a nearly 14 percent decrease in foreclosure activity from the previous month and a 22 percent decrease in foreclosure activity from November 2009.

Other states with foreclosure rates ranking among the top 10 in November were Arizona, Florida, Georgia, Michigan, Idaho, Illinois and Colorado.

10 states account for more than 70 percent of national total
California alone accounted for 22 percent of the national total in November, with 57,378 properties receiving a foreclosure filing during the month — the nation’s highest state total. Default notices in California, which is primarily a non-judicial foreclosure state, decreased 11 percent from the previous month, while scheduled auctions decreased 2 percent and bank repossessions decreased 40 percent.

With 32,938 properties receiving a foreclosure filing in November, Florida posted the second highest state total despite a 42 percent drop in foreclosure activity from the previous month. Default notices in Florida, which is a judicial foreclosure state, decreased 52 percent from the previous month, while scheduled auctions decreased 46 percent and bank repossessions decreased 20 percent.

With 15,311 properties receiving a foreclosure filing in November, Michigan posted the third highest state total despite a 21 percent drop in foreclosure activity from the previous month. Default notices in Michigan, which is primarily a non-judicial foreclosure state, decreased 4 percent from the previous month, while scheduled auctions decreased 20 percent and REOs decreased 35 percent.

Georgia posted the fourth highest state total, with 14,423 properties receiving a foreclosure filing, and Texas posted the fifth highest state total, with 13,369 properties receiving a foreclosure filing. Both states — which are primarily non-judicial foreclosure states with short foreclosure processes that do not require a public default notice separate from the published foreclosure auction notice — documented double-digit percentage increases in scheduled auctions from the previous month but also documented double-digit percentage decreases in bank repossessions from the previous month.

Other states with foreclosure activity totals among the nation’s 10 highest in November were Illinois (12,941), Nevada (11,371), Ohio (10,458), Arizona (10,384) and Pennsylvania (5,672).

Top 10 metro foreclosure rates in Nevada, California and Florida
With one in every 86 housing units receiving a foreclosure filing in November, the Las Vegas-Paradise, Nev., metro area maintained the nation’s highest foreclosure rate among metropolitan areas with a population of 200,000 or more. Las Vegas foreclosure activity decreased 19 percent from the previous month but was up 21 percent from November 2009.

Reno-Sparks, Nev., also posted a foreclosure rate in the top 10, at No. 8 with one in every 150 housing units receiving a foreclosure filing in November.

Seven California cities posted foreclosure rates that ranked in the top 10: Stockton at No. 2 with one in every 130 housing units receiving a foreclosure filing; Bakersfield at No. 3 (one in 133 housing units); Modesto at No. 4 (one in 135 housing units); Vallejo-Fairfield at No. 5 (one in 144 housing units); Merced at No. 6 (one in 147 housing units); Riverside-San Bernardino-Ontario at No. 7 (one in 148 housing units); and Sacramento-Arden-Arcade-Roseville at No. 9 (one in 163 housing units).

Big monthly drops in foreclosure activity in many Florida metro areas resulted in only one metro area in the state with a foreclosure rate ranking among the top 10: Port St. Lucie at No. 10 with one in every 173 housing units receiving a foreclosure filing in November.

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