Signaling a revival of the housing market, the foreclosure market report released by RealtyTrac revealed a fall in the overall foreclosure activity in Jan 2013. As per this leading online marketplace of foreclosure properties, foreclosure filings plunged 7% from Dec 2012 and 28% from Jan 2012. This brought the aggregate number of properties receiving default, auction or repossession notices to 150,864.
Foreclosure starts – default notices issued and foreclosure auctions (depending on the state’s foreclosure procedure) – declined 11% from Dec 2012 and 28% from Jan 2012 to 64,773 properties in the reported month. This was the lowest level since Jun 2006. The primary reason for the drop was a significant fall in issuance of notice of defaults in California as new regulations on mortgage servicers were put in place in Jan 2013.
Likewise, bank repossessions (REOs) dipped 5% from the prior month and 24% from the last-year month to 50,453 properties. This was the lowest level since Feb 2008.
The top 10 states with the highest foreclosure rates were Florida, Nevada, Illinois, Arizona, Georgia, Ohio, Washington, California, Indiana and Michigan.
Moreover, the drop in overall foreclosure activity was a result of the switching of mortgage servicers and the government to other options to prevent foreclosures. Yet, the dip in foreclosures is expected to be at an uneven pace, as processes that are being used in handling these vary from state to state.
Foreclosure activity is expected to rise in the judicial states as the states have substantial backlogs to clear. Further, as the major lenders – 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) – adjust to the new rules set under the National Mortgage Settlement as well as several other laws, foreclosure activity is bound to rise in the subsequent months.
Yet, we believe that the gradually stabilizing housing sector is likely to aid homeowners to avoid foreclosures in the near term. Also, the rate at which properties are entering the foreclosure procedure is expected to trend down gradually, thereby lifting the housing prices going forward. Moreover, the housing market will get an opportunity to regain a solid foothold if there are sufficient buyers for these properties.