Indicating a continuous strengthening of housing prices, the foreclosure market report – released by RealtyTrac – depicted a marginal rise in overall foreclosure activity in May 2013. According to this leading online marketplace of foreclosure properties, foreclosure filings were up 2% from Apr 2013 but down 28% from May 2012.
This brought the aggregate number of properties receiving default, auction or repossession notices to 148,054. The primary reason for the monthly rise was an increase in bank repossessions (REOs), which was up 11% from Apr 2013 but down 29% from May 2012 with 38,946 properties in May.
In aggregate, 33 states reported a monthly rise in REO activity. Further, from Apr 2013, REO activity rose 9% in non-judicial states and 13% in judicial states.
Additionally, Citigroup Inc. (C - Analyst Report) was the lone mortgage servicer – among the 5 banks involved in last year’s national mortgage settlement – to report lower repossessions in May. The other 4 banks including JPMorgan Chase & Co. (JPM - Analyst Report), Bank of America Corp (BAC - Analyst Report), Ally Financial Inc. and Wells Fargo & Company (WFC - Analyst Report) recorded a rise in repossessions.
Moreover, foreclosure starts – default notices issued and foreclosure auctions (depending on the state’s foreclosure procedure) – jumped 4% from Apr 2013 but declined 33% from May 2012 to 72,938 properties in the reported month. Foreclosure starts increased in 26 states on a monthly basis, while 14 states reported the rise on a yearly basis.
The foreclosure problem continued to shift toward judicial states. In the reported month, Florida, Ohio, Maryland, South Carolina and Illinois had 5 of the top 6 foreclosure rates countrywide. In the second position, Nevada was top-ranked among the non-judicial states.
Rise in foreclosure activity is expected continue as mortgage servicers are more confident of getting higher value for foreclosed properties, given the increasing demand for these as well as rise in home prices. Further, according to the S&P/Case-Shiller index of values in 20 cities, the U.S. home prices rose almost 11% in the year through Mar 2013, marking the biggest yearly gain since Apr 2006. However, foreclosure activity is expected to remain volatile, as the processes being used for handling these differ from state to state.
Nevertheless, the stabilizing housing sector, increase in jobs, and low mortgage rates will likely make homeowners avoid foreclosures. Additionally, the rate at which properties are entering the foreclosure procedure is expected to eventually slacken, leading to further rise in housing prices.