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Foreclosure Activity Tumbles To 5-Year Low, Says RealtyTrac

Foreclosure filings fell in the first quarter but the mortgage and housing crisis is hardly over.

RealtyTrac, the leading source of foreclosure data and listings, says that foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 572,928 properties during the first quarter, down 16 percent from the same period in 2011.

“The low foreclosure numbers in the first quarter are not an indication that the massive reservoir of distressed properties built up over the past few years has somehow miraculously evaporated,” said Brandon Moore, chief executive officer of RealtyTrac. “There are hairline cracks in the dam, evident in the sizable foreclosure activity increases in judicial foreclosure states over the past several months, along with an increase in foreclosure starts in many judicial and non-judicial states in March. The dam may not burst in the next 30 to 45 days, but it will eventually burst, and everyone downstream should be prepared for that to happen — both in terms of new foreclosure activity and new short sale activity.”

In fact, a tidal wave of foreclosures is coming. The reason is that foreclosure activity has slowed in many areas and actually stopped in some places as the court system tries to deal with several issues. At some point — perhaps sooner than later — the system will be on track and foreclosure activity will soar.

First, we have large numbers of foreclosure filings which were originally made through the robo-signing process. These were foreclosure affidavits signed by individuals at the rate of at least several hundred forms per day.  The accuracy of these forms — and therefore the accuracy of potential foreclosures — is uncertain. In order to make the foreclosure process fair such affidavits must be reviewed to assure they are accurate. In addition, it may be necessary to review past foreclosures to make certain that no borrower lost their home to a wrongful foreclosure action. The $26 billion nationwide robo-signing settlement between five major lenders and 49 states suggests that delays related to robo-signing may be nearing an end.

Second, lenders must be able to show ownership of the debt before they can foreclose. Because of the electronic purchase and sale of mortgage notes there have been cases where the location of the notes is either unknown or unclear. Again, we want to make sure that claims of note ownership are correct so that wrongful foreclosures are avoided.


 

Also from RealtyTrac:

The first quarter total was the lowest quarterly total since the fourth quarter of 2007, when 527,740 properties with foreclosure filings were reported. The report shows one in every 230 U.S. housing units with a foreclosure filing during the quarter.

Foreclosure filings were reported on 198,853 U.S. properties in March, a 4 percent decrease from February and a 17 percent decrease from March 2011. March’s total was the lowest monthly total since July 2007, and also the first monthly total below 200,000 since July 2007.

Judicial foreclosure activity increases in first quarter

The nationwide decrease in foreclosure activity was caused primarily by decreasing activity in states that use the non-judicial foreclosure process. These 24 states combined, along with the District of Columbia, had 329,854 properties with foreclosure filings during the quarter, more than half the national total — but a decrease of 8 percent from the previous quarter and a decrease of 28 percent from the first quarter of 2011.

Twenty non-judicial states registered year-over-year decreases in foreclosure activity, led by Arkansas, with a 79 percent drop, and Nevada, with a 62 percent drop. Recent legislation or court cases have disrupted the normal foreclosure process in both these states. Other non-judicial states with substantial year-over-year decreases in foreclosure activity included Washington (down 55 percent), Arizona (down 41 percent), Texas (down 31 percent), and California (down 21 percent).

Meanwhile foreclosure activity increased in states that primarily use the judicial foreclosure process. These 26 states combined accounted for 243,074 properties with foreclosure filings during the quarter, an increase of 8 percent from the previous quarter and an increase of 10 percent from the first quarter of 2011.


Judicial states posting some of the biggest year-over-year increases in foreclosure activity in the first quarter included Indiana (up 45 percent), Connecticut (up 38 percent), Massachusetts (up 26 percent), Florida (up 26 percent), South Carolina (up 26 percent), and Pennsylvania (up 23 percent).

Foreclosure starts increase for third straight month in March

First-time foreclosure starts, either default notices or scheduled foreclosure auctions depending on the state’s foreclosure process, increased 7 percent from February to March, the third straight monthly increase. Foreclosure starts in March exceeded 100,000 for the first time since November 2011, although they were still down 11 percent from March 2011.

States with the biggest monthly increases in foreclosure starts included Nevada (up 153 percent), Utah (up 103 percent), New Jersey (up 73 percent), Maryland (up 53 percent) and North Carolina (up 47 percent). Thirty-one states posted monthly increases in foreclosure starts in March.

Nevada, California, Arizona post top state foreclosure rates

Nevada foreclosure activity decreased 26 percent from the previous quarter and was down 62 percent from the first quarter of 2011, but the state still posted the nation’s top foreclosure rate — one in every 95 Nevada housing units had a foreclosure filing during the first quarter. Although Nevada had the top foreclosure rate for the quarter, the state’s foreclosure rate slipped to second highest among the states in March, after 62 consecutive months in the No. 1 spot. Arizona’s foreclosure rate was the nation’s highest state foreclosure rate in March.

Although California default activity increased from February to March — up 14 percent — the state’s overall foreclosure activity in the first quarter was down on a quarterly and annual basis. TheCalifornia foreclosure rate still ranked second highest among all states in the first quarter, with one in every 103 housing units with a foreclosure filing.

One in every 106 Arizona housing units had a foreclosure filing in the first quarter, the nation’s third highest state foreclosure rate. Arizona foreclosure activity during the quarter was down 4 percent from the previous quarter and was down 41 percent from the first quarter of 2011.

Other states with foreclosure rates ranking among the top 10 in the first quarter were Georgia (one in 119 housing units with a foreclosure filing), Florida (one in 123), Illinois (one in 141), Michigan (one in 162), Colorado (one in 191), Utah (one in 198) and Wisconsin (one in 206).

California, Florida, Illinois post top foreclosure activity totals

California’s 133,245 properties with foreclosure filings in the first quarter was the highest total of any state and accounted for 23 percent of U.S. foreclosure activity during the quarter.

Florida posted the second highest state total, with 73,344 properties with foreclosure filings during the quarter. Florida foreclosure activity in the first quarter increased 4 percent from the previous quarter and was up 26 percent from the first quarter of 2011.

Illinois foreclosure activity increased 17 percent from the previous quarter and was up 14 percent from the first quarter of 2011, helping the state post the nation’s third highest state foreclosure total in the first quarter: 37,660 properties with foreclosure filings.

Other states with foreclosure activity totals among the nation’s 10 highest were Georgia (34,234), Michigan (27,934), Arizona (26,956), Texas (23,807), Ohio (23,780), Pennsylvania (12,746), and Wisconsin (12,727).

Time to foreclose increases nationwide, but down in key states

U.S. properties foreclosed in the first quarter took an average of 370 days to complete the foreclosure process, up from 348 days in the previous quarter and the highest average number of days going back to the first quarter of 2007.

Average foreclosure timelines appear to be turning a corner in some bellwether states. The average time to foreclose in California was 320 days, down from 352 days in the previous quarter and the second straight quarterly decrease after 12 straight quarterly increases.

The average time to foreclose also decreased in Colorado, Utah, Massachusetts, Nevada, Michigan and Maryland. Despite the decrease, Maryland still posted the fifth longest time to foreclose, 618 days. The states with the top four longest times to foreclose were New York (1,056 days), New Jersey (966 days), Florida (861 days) and Illinois (628 days).

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