The number of homes lost to foreclosure fell 3 percent in 2012 according to the latest annual data from RealtyTrac. Meanwhile, foreclosure filings — which can be seen as a measure of future foreclosure activity — tumbled almost 15 percent during the year.
Default notices, scheduled auctions and bank repossessions — were reported on 1,836,634 U.S. properties in 2012, according to RealtyTrac, down 3 percent from 2011 and down 36 percent from the peak of 2.9 million properties with foreclosure filings in 2010.
The reason for a foreclosure decline and a fall in foreclosure filings differ.
First, foreclosure numbers slid in some measure because of strong short sale activity. Once virtually unknown, in November short sales represented 10 percent of all existing home sales, according to the National Association of Realtors.
Second, in many jurisdictions there have been protracted legal battles because of robo-signing issues and because of concerns that mortgage sales and re-sales without individual recordings for each transaction violated local property recordation rules. By and large, the lending industry has prevailed in most cases, thus opening the doors to additional foreclosures. However, for much of 2012 — just as in 2011 — foreclosure activity slowed while court cases were being considered.
“2012 was the year of the judicial foreclosure, with foreclosure activity increasing from 2011 in 20 of the 26 states that primarily use the judicial process, and a judicial state — Florida — posting the nation’s highest state foreclosure rate for the first time since the housing crisis began,” said Daren Blomquist, vice president at RealtyTrac. “Meanwhile foreclosure activity continued to decline in 19 of the 24 states that use the more streamlined non-judicial foreclosure process, but there could be a backlog of delayed foreclosures building up in some of those states as well as the result of recent state legislation and court rulings that raise the bar for lenders to foreclose.
Third, federal efforts under the Making Home Affordable programs have resulted in more than 1.1 million loan modifications. In many cases homes that would have been foreclosed were saved from the auction block.
Fourth, home prices have been rising. This has made walk-aways less attractive from a borrower’s perspective and increased buyer interest.
“The influx of foreclosure activity in 2012 in many local markets should translate into more foreclosure inventory available for sale in 2013 in those markets,” Blomquist noted. “That is good news for buyers and investors, but could result in some short-term weakness in home prices as the often-discounted foreclosure sales weigh down overall home values.”
|Year||Foreclosure Filings||Annual Change|
|2012||2,304,941||down 14.59 percent|
|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|
Chart Copyright 2013: OurBroker.com
RealtyTrac also reported several other major trends for 2012:
December activity hits 68-month low, bank repossessions increase in fourth quarter
Foreclosure filings were reported on 162,511 U.S. properties in December, a 10 percent decrease from the previous month and down 21 percent from December 2011. December’s total was the lowest monthly total since April 2007 — a 68-month low. All three types of foreclosure filings — default notices (NOD, LIS), scheduled foreclosure auctions (NTS, NFS), and bank repossessions (REO) decreased both on a monthly and annual basis in December.
Foreclosure filings were reported on 503,462 U.S. properties during the fourth quarter, a 5 percent decrease from the previous quarter — despite a 9 percent quarter-over-quarter increase in bank repossessions — and a 14 percent decrease from the fourth quarter of 2011. The fourth quarter total was the lowest quarterly total since the third quarter of 2007, when 448,145 U.S. properties received foreclosure filings.
Florida, Nevada, Arizona post top state foreclosure rates
More than 3 percent of Florida housing units (3.11 percent, or one in 32) had at least one foreclosure filing in 2012, giving it the nation’s highest state foreclosure rate for the year. A total of 279,230 Florida properties had a foreclosure filing during the year, a 53 percent increase from 2011 but still 42 percent below the more than 485,000 Florida properties with foreclosure filings in 2010.
After five consecutive years with the highest state foreclosure rate, Nevada dropped to No. 2 on the list in 2012 thanks to a 57 percent drop in foreclosure activity from 2011. A total of 31,658 Nevada properties had a foreclosure filing during the year, 2.70 percent of all housing units in the state (one in every 37).
Arizona foreclosure activity in 2012 decreased 33 percent from 2011 and was down 51 percent from 2010, lowering the state’s foreclosure rate to the third highest in the nation following three consecutive years with the second highest rate. A total of 76,487 Arizona properties had foreclosure filings during the year, 2.69 percent of all housing units in the state (one in 37).
Georgia posted the nation’s fourth highest state foreclosure rate, with 2.58 percent of housing units (one in 39) receiving at least one foreclosure filing in 2012, and Illinois posted the nation’s fifth highest state foreclosure rate, also with 2.58 percent of housing units (one in 39) receiving at least one foreclosure filing during the year.
Other states with foreclosure rates among the nation’s 10 highest were California (2.33 percent), Ohio (1.75 percent), Michigan (1.69 percent), South Carolina (1.66 percent), and Colorado (1.64 percent).
Foreclosure inventory rises from low point in May, still 31 percent below peak
As of the end of the year, more than 1.5 million homes were in some stage of foreclosure or bank-owned, up 9 percent from the end of 2011, but still 31 percent below the peak of 2.2 million at the end of 2010. Foreclosure inventory had dropped to a 57-month low of 1.3 million in May 2012, but has since risen off that 57-month low.
Florida accounted for the biggest share of foreclosure inventory of any state with 305,766 properties in some stage of foreclosure or bank owned (20 percent of the national total), followed by California with 212,172 (14 percent), Illinois with 135,858 (9 percent), Ohio with 76,015 (5 percent), and New York with 69,044 (5 percent).
Lenders with the most inventory of bank-owned (REO) properties were the government-backed entities of Fannie Mae, Freddie Mac and the U.S. Department of Housing and Urban Development (HUD) with a combined 26 percent of all REO inventory, followed by Bank of America with 8 percent, Wells Fargo with 6 percent, US BankCorp with 4 percent and Chase with 4 percent.
Of the properties in some stage of foreclosure or bank owned at the end of 2012, an estimated 37 percent had a market value between $100,000 and $200,000, while an estimated 27 percent had a market value between $50,000 and $100,000, and an estimated 15 percent had a market value between $200,000 and $300,000.
Median home prices up in 25 states, 1.6 million fewer homeowners underwater
Lower foreclosure inventory during the year may have helped home prices to hit bottom and start rising in many markets during the year. Median home prices during the first 10 months of 2012 rose compared to the same time period in 2011 in 25 states and in 16 of the nation’s 20 largest metro areas.
Nationwide the average monthly median home price during the first 10 months of 2012 was $164,712 — nearly identical to the average monthly median home price of $164,960 during the same time period in 2011. The average monthly list price during the first 12 months of 2012 was $166,110, showing that sellers on average were getting 99 percent of their asking price during the year.
Rising home prices helped boost home values in 2012, thereby lifting many homeowners across the country out of negative equity compared to a year ago. About 10.9 million homeowners nationwide — representing 26 percent of all homeowners with a mortgage — owed at least 25 percent more on their combined mortgages than what their homes were worth as of January 2013, down from 12.5 million seriously underwater homeowners representing 28 percent of all homeowners with a mortgage in January 2012.
Average days to foreclose nationwide jumps to 414
U.S. properties foreclosed in the fourth quarter took an average of 414 days to complete the foreclosure process, up from 382 days in the third quarter and up from 348 days in the fourth quarter of 2011. It was the longest time to complete the foreclosure process since RealtyTrac began tracking the metric in the first quarter of 2007.
New York had the longest average time to foreclose, at 1,089 — up from 1,072 days in the third quarter and up from 1,019 days in the fourth quarter of 2011 — followed by New Jersey at 987 days — up from 931 days in the third quarter and up from 964 days in the fourth quarter of 2011.
The average time to foreclose in Florida decreased for the second straight quarter but was still the third highest in the country at 853 days, followed by Hawaii at 781 days and Illinois at 697 days.
The average time to foreclose in Texas increased 17 percent from the previous quarter and was up 26 percent from a year ago, but the state still documented the shortest average time to complete a foreclosure, at 113 days.
Other states with the shortest foreclosure timelines in the fourth quarter were Delaware (145 days), Virginia (146 days), Alabama (163 days), Maine (168 days) and Georgia (170 days).
Top metro foreclosure rates
Despite a 25 percent decrease in foreclosure activity from 2011, Stockton, Calif., posted the nation’s highest foreclosure rate in 2012 among metropolitan statistical areas with a population of 200,000 or more: 3.98 percent of housing units (one in 25) with a foreclosure filing during the year.
Six other California cities ranked in the top 20 highest metro foreclosure rates for the year, including Riverside-San Bernardino-Ontario at No. 2 (3.86 percent of housing units with a foreclosure filing), Modesto at No. 3 (3.82 percent), and Vallejo-Fairfield at No. 4 (3.73 percent). All seven California metro areas in the top 20 posted decreasing foreclosure activity from 2011.
Florida cities accounted for eight of the top 20 highest metro foreclosure rates in 2012, led by Miami at No. 5 (3.71 percent of housing units with a foreclosure filing), Palm Bay-Melbourne-Titusville at No. 6 (3.60 percent), and Orlando at No. 8 (3.46 percent). Seven out of the eight Florida metro areas in the top 20 documented an increase in foreclosure activity for the year.
Other metro areas with foreclosure rates in the top 20 were Atlanta at No. 7 (3.51 percent of housing units with a foreclosure filing), Chicago at No. 9 (3.31 percent), Rockford, Ill., at No. 10 (3.28 percent), Las Vegas at No. 16 (3.10 percent), and Phoenix at No. 17 (3.09 percent).
The RealtyTrac Year-End U.S. Foreclosure Market Report provides a count of the total number of properties with at least one foreclosure filing entered into the RealtyTrac database during the year. Some foreclosure filings entered into the database during the year may have been recorded in the previous year. Data is collected from more than 2,200 counties nationwide, and those counties account for more than 90 percent of the U.S. population. RealtyTrac’s report incorporates documents filed in all three phases of foreclosure: Default —Notice of Default (NOD) and Lis Pendens (LIS); Auction — Notice of Trustee Sale and Notice of Foreclosure Sale (NTS and NFS); and Real Estate Owned, or REO properties (that have been foreclosed on and repurchased by a bank). For the annual and quarterly reports, if more than one type of foreclosure document is received for a property during the year or quarter, only the most recent filing is counted in the report. The annual, quarterly and monthly reports all check if the same type of document was filed against a property previously. If so, and if that previous filing occurred within the estimated foreclosure timeframe for the state where the property is located, the report does not count the property in the current year, quarter or month.