There was a significant fall in foreclosure activity for Aug 2013, with a lesser number of residential properties entering the foreclosure process. The foreclosure market report – released by RealtyTrac – depicted the foreclosure activity for the said month to be the lowest in nearly 8 years.
According to this leading online marketplace of foreclosure properties, foreclosure filings were down 2% from Jul 2013 and 34% from Aug 2012. This brought the aggregate number of properties receiving default, auction or repossession notices to 128,560.
Foreclosure starts – default notices issued and foreclosure auctions (depending on the state’s foreclosure procedure) – fell 8% from Jul 2013 and 44% from Aug 2012 to 55,775 properties in Aug 2013. Foreclosure starts decreased in 38 states (both judicial and non-judicial) on a yearly basis, while 17 states reported a rise in the same.
However, bank repossessions (REOs) were up 6% from Jul 2013 but down 25% from Aug 2012 with 39,277 properties. On an aggregate, REO activity rose in 26 states on a monthly basis and in 23 states on an annual basis.
According to the trend so far, this year is expected to end with nearly 490,000 completed foreclosures, down approximately 26% from the 2012 level. Further, foreclosures are now expected to normalize – around 52,000 foreclosures per month – very soon. This will, in turn, help to limit the adverse impact of foreclosures on property values.
Notably, foreclosure-related problems continue to shift toward judicial states. The top 5 states with the highest foreclosure rates are Nevada, Florida, Ohio, Maryland and Delaware. Of these, the first 4 are judicial states. Also, as the major mortgage servicers – JPMorgan Chase & Co. (JPM - Analyst Report), Bank of America Corp (BAC - Analyst Report), Citigroup Inc. (C - Analyst Report), Ally Financial Inc. and Wells Fargo & Company (WFC - Analyst Report) – adjust to the new regulations under the National Mortgage Settlement along with several other state laws, foreclosure activity is expected to rise in judicial states.
Though the foreclosure crisis can be said to be nearly over, its effects are expected to linger for some time. Moreover, with continued rise in home prices and a decrease of underwater borrowers, this trend of fall in foreclosure activities will likely persist.
Moreover, the stabilizing housing sector, increase in jobs, and affordable mortgage rates will likely make homeowners avoid foreclosures. Additionally, given the lower number of properties entering the foreclosure procedure, this will eventually lead to further rebound in housing sector.