Indicating the marginal revival of the housing market, the foreclosure market report – released by RealtyTrac – revealed that the overall foreclosure activity in Mar 2013 continued to show a downward trend. As per this leading online marketplace of foreclosure properties, foreclosure filings plunged 23% from Mar 2012 and 1% from Feb 2013. This brought the aggregate number of properties receiving default, auction or repossession notices to 152,500.
Moreover, for the first quarter of 2013, foreclosure filings were down 23% year over year and 12% sequentially, thereby bringing the total number of properties receiving default, auction or repossession notices to 442,117. This was the lowest level since the second quarter of 2007.
Foreclosure starts – default notices issued and foreclosure auctions (depending on the state’s foreclosure procedure) – declined 28% from Feb 2012 but rose 2% from Jan 2013 to 73,113 properties in the reported month. Foreclosure starts jumped in 12 states from the prior-year month and in 23 states from the prior month.
Meanwhile, bank repossessions (REOs) plunged 21% from the prior-year month and 3% from the last month to 43,597 properties in March. This was the lowest level since Sep 2007. In aggregate, 34 states reported year over year fall in REO activity.
The top 10 states with the highest foreclosure rates in the first quarter were FL, NV, IL, OH, GA, AZ, WA, MD, SC and CA. Additionally, the procedure to complete the foreclosure of properties in the reported quarter took an average of 477 days, up from 414 days in the previous quarter and a record high since the first quarter of 2007.
The drop in foreclosure activity is a result of the switching of mortgage servicers and the government to other options to prevent foreclosures. Yet, the dip is expected to remain volatile, as processes that are being used in handling these differ from state to state.
Foreclosure activity is expected to rise in the judicial states as the latter have substantial backlogs to clear. Further, as the major 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 rules set under the National Mortgage Settlement as well as several other state laws, foreclosure activity is bound to rise in the near term.
Nevertheless, we believe that the stabilizing housing sector is likely to aid homeowners in avoiding foreclosures. Further, the rate at which properties are entering the foreclosure procedure is expected to slow down gradually, lifting the housing prices going forward. The housing market will also get an opportunity to regain a strong foothold if there are sufficient buyers for these properties.