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RealtyTrac: Foreclosure Activity Down For Eighth Month

For the eighth month in a row foreclosure activity has fallen on an annualized basis. The numbers for May, according to RealtyTrac, show that  foreclosure filings — default notices, scheduled auctions and bank repossessions — were down 2 percent compared to April and 33 percent lower than a year ago.

The catch? Well there are a few of them.

First, lower is a relative term. The reality is that 214,927 U.S. properties faced foreclosure notices of some kind. On an historic basis that’s a very big number.

Second, foreclosure activity is not down because of the sudden onset of better economic times. Instead, it’s apparent that the paperwork boondoggle, which became apparent in late 2010, continues to haunt lenders.

“Foreclosure processing delays continue to mask the true face of the foreclosure situation, although there were some clues in the May numbers of what lies behind that mask,” said James J. Saccacio, chief executive officer of RealtyTrac.

Foreclosures are being deferred even when homeowners are not making payments because lenders increasingly need to prove that they actually own loans when taking homeowners to court. Why? In one case that has become the poster child for questionable paperwork, a Florida couple, Warren and Maureen Nyerges, faced foreclosure claims even though they had paid cash for their home — that’s right, there was NO mortgage according to Florida station WINK-TV.

In addition, there’s the robo-signing scandal — an unknown number of sworn foreclosure affidavits which were completed without a full check of the data they were supposed to confirm.

Here’s more from RealtyTrac:

Foreclosure Activity by Type

Default notices (NOD, LIS) were filed for the first time on a total of 58,797 U.S. properties in May, a 7 percent decrease from the previous month and a 39 percent decrease from May 2010. May’s total was the lowest number of monthly default notices since December 2006 — a 53-month low.

Foreclosure auctions (NTS, NFS) were scheduled for 89,251 U.S. properties in May, an increase of 3 percent from the 31-month low hit in April, but still down 33 percent from May 2010. May’s monthly increase followed eight straight monthly decreases in scheduled foreclosure auctions.

Bank repossessions (REOs) decreased on a monthly basis for the second straight month in May, with 66,879 U.S. properties repossessed by lenders during the month — a 4 percent decrease from the previous month and a 29 percent decrease from May 2010. Since the so-called robo-signing controversy came to light in October 2010, REO activity has followed a rollercoaster pattern, with five monthly decreases and three monthly increases.

Non-judicial foreclosure activity accounts for two-thirds of national total

A total of 141,348 properties received foreclosure filings in states where lenders primarily use the non-judicial foreclosure process — nearly two-thirds of the national total. Overall foreclosure activity in non-judicial foreclosure states was down 3 percent from April and down 25 percent from May 2010.

Scheduled auctions in non-judicial foreclosure states increased 2 percent on a month-over-month basis, led by a 16 percent increase in California and 10 percent increases in Texas, Virginia and Michigan.

Although REO activity in non-judicial foreclosure states overall was down 6 percent from the previous month, some non-judicial foreclosure states posted substantial month-over-month increases in REO activity, including Georgia, with a 79 percent increase, Virginia, with a 36 percent increase, and Michigan, with a 19 percent increase.

A total of 73,579 properties received foreclosure filings in states where lenders primarily use the judicial foreclosure process, virtually unchanged from the previous month but down 45 percent from May 2010.

Scheduled auctions increased 6 percent on a month-over-month basis in judicial foreclosure states, with Oklahoma posting an 86 percent increase, Maryland posting a 56 percent increase and Illinois posting a 47 percent increase.


REO activity in judicial foreclosure states increased 1 percent on a month-over-month basis, with New York posting a 97 percent increase, New Jersey posting a 21 percent increase, Wisconsin posting a 20 percent increase and Indiana posting an 18 percent increase.

Nevada, Arizona, California post top state foreclosure rates

Nevada posted the nation’s highest state foreclosure rate for the 53rd straight month in May, with one in every 103 housing units receiving a foreclosure filing during the month. Nevada REOs in May were down 21 percent from the record high hit in April, while default notices (NOD) increased 8 percent from the previous month and scheduled auctions (NTS) decreased 1 percent from the previous month.

Scheduled auctions in Arizona (NTS) increased 4 percent in May from April, helping the state maintain the nation’s second highest foreclosure rate — one in every 210 Arizona housing units received a foreclosure filing in May. Arizona REO activity in May was down 8 percent from the previous month but virtually unchanged from May 2010.

California posted the nation’s third highest state foreclosure rate, with one in every 259 housing units receiving a foreclosure filing during the month. Scheduled auctions in California (NTS) increased 16 percent from the previous month, while default notices (NOD) were down 16 percent to a 31-month low and REOs decreased 25 percent from the previous month.

Michigan posted the nation’s fourth highest state foreclosure rate in May, with one in every 311 housing units receiving a foreclosure filing during the month, and Utah posted the nation’s fifth highest state foreclosure rate, with one in every 365 housing units receiving a foreclosure filing during the month.

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

Five states account for more than half of U.S. foreclosure activity

Five states accounted for 51 percent of U.S. foreclosure activity in May, led by California, where 51,906 properties received a foreclosure filing during the month.

A total of 19,192 Florida properties received a foreclosing filing in May, the second highest state total despite a 62 percent decrease from May 2010. Florida initial default notices (LIS) decreased 10 percent from the previous month, but scheduled auctions (NFS) and REOs in Florida both increased on a monthly basis.

A total of 14,614 Michigan properties received a foreclosure filing in May, the third highest state total, followed by Arizona, with 13,122 properties receiving a foreclosure filing during the month, and Nevada, with 11,039 properties receiving a foreclosure filing during the month.

Other states with foreclosure activity totals among the nation’s 10 highest in May were Illinois (10,574), Georgia (10,503), Texas (9,055), Ohio (8,379), and Wisconsin (4,660).

Rust Belt city breaks into Top 10 metro foreclosure rates dominated by Sun Belt

Las Vegas continued to post the nation’s highest foreclosure rate among metropolitan areas with a population of 200,000 or more, with one in every 89 housing units receiving a foreclosure filing in May — more than six times the national average.

The Reno-Sparks metro area in Nevada also continued to post a foreclosure rate among the top 10 highest, at No. 5 with one in every 158 housing units receiving a foreclosure filing in May.

Six California cities posted foreclosure rates in the top 10, led by Stockton at No. 2 (one in every 139 housing units receiving a foreclosure filing during the month), Vallejo-Fairfield at No. 3 (one in every 140 housing units), and Modesto at No. 4 (one in every 154 housing units). Other California cities in the top 10 were Bakersfield at No. 7 (one in every 169 housing units), Riverside-San Bernardino-Ontario at No. 8 (also one in every 169 housing units), and Merced at No. 10 (one in every 193 housing units).

With one in every 165 housing units receiving a foreclosure filing in May, the Phoenix-Mesa-Scottsdale metro area in Arizona posted the nation’s sixth highest metro foreclosure rate.

The Flint, Mich., metro area broke into the top 10 thanks to a 106 percent month-over-month increase in foreclosure activity — although the metro area’s foreclosure activity was still down slightly from May 2010. One in every 182 Flint housing units received a foreclosure filing in May, ranking No. 9 among the nation’s metro areas.

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