Signaling the gradual recovery in the housing market, the foreclosure market report released by RealtyTrac revealed a drop in the overall foreclosure activity in the third quarter. As per this leading online marketplace of foreclosure properties, foreclosure filings plummeted 5% from the last quarter and 13% from the prior-year quarter. This brought the total number of properties receiving default, auction or repossession notices to 531,576.
Further, foreclosure starts – default notices issued and foreclosure auctions (depending on the state’s foreclosure procedure) – declined 8% both from the prior quarter and the prior-year quarter to 284,720 properties in the third quarter. Additionally, the procedure to complete the foreclosure of properties in the third quarter took an average of 382 days, up from 378 days in the previous quarter and 336 days from the year-ago quarter.
In the reported quarter, the top 10 states with the highest foreclosure rates were Florida, Arizona, California, Illinois, Georgia, Nevada, Ohio, Michigan, South Carolina and Colorado. Moreover, out of the total 24 non-judicial states, the overall foreclosure activity declined in 20 states. However, of the total 26 judicial states, 14 reported a quarterly augmentation.
Overall, foreclosure activity has been accelerating in judicial states after the $25 billion deal was signed between five mortgage servicers – JPMorgan Chase & Co. (JPM - Analyst Report), Bank of America Corporation (BAC - Analyst Report), Citigroup Inc. (C - Analyst Report), Ally Financial Inc. and Wells Fargo & Company (WFC - Analyst Report) – 49 states’ attorneys general and the regulators earlier this year. In a report released by the official monitoring the implementation of the deal, it was stated that the five banks provided nearly $10.6 billion in relief during the period ranging from March 1 to June 30.
Nevertheless, foreclosure activity has been receding in most non-judicial states as they did not create a significant backlog of pending foreclosure cases over the last two years, when foreclosures were halted in almost all the judicial states. Furthermore, a number of steps – short sale, refinancing of loans and loan modifications – are being undertaken by the government and banks to prevent foreclosures.
Over the nine-month period, foreclosures were completed on a total of 505,585 properties. Thus, it is anticipated that the country is on track to close foreclosures on 675,000 properties by the end of this year. This is lower than 800,000 completed foreclosures in 2011.
The rate at which properties are entering the foreclosure procedure is expected to trend down gradually, thereby lifting the housing prices going forward. However, the decline in foreclosures will be at an uneven pace, as processes that are being used in handling them vary from state to state. Moreover, the housing market will get a chance to regain a solid foothold if there are sufficient buyers for these properties.