Foreclosure activity in April fell nationally
to the lowest level since the summer of 2007, but government
intervention and the recent $25 billion mortgage servicing settlement
are now changing the face of the crisis.
filings, which include default notices, scheduled auctions and bank
repossessions, fell 5 percent in April from March, according to a new
report from RealtyTrac, and are down 14 percent from April of 2011. One
in every 698 U.S. housing units had a foreclosure filing during the
foreclosure activity in many state and local markets in April was masked
at the national level by sizable decreases in hard-hit foreclosure
states like California, Arizona and Nevada,” said Brandon Moore, CEO of
RealtyTrac in a release. “Those three states, and several other
non-judicial foreclosure states like them, more efficiently processed
foreclosures last year, resulting in fewer catch-up foreclosures this
banks are also suspending foreclosure actions, as they comply with the
mortgage servicing settlement that was the result of so-called
“robo-signing” in foreclosure document processing. Bank of America recently announced that it was beginning a summer-long campaign to contact 200,000 borrowers, and offer them principal reduction,
as part of the settlement; foreclosure actions, bank representatives
said, would be suspended until the bank had reached them all and
determined if they were eligible for new loan modifications.
Lenders are also responding more efficiently to
requests for short sales, which is when the home is sold for less than
the value of the mortgage. New financial incentives from the government
and new streamlined programs at Fannie Mae and Freddie Mac are behind
much of that.
preliminary first quarter sales data show that pre-foreclosure sales,
typically short sales, are on pace to outnumber sales of bank-owned
properties during the quarter in California, Arizona and 10 other
states,” adds Moore.
also reported today by the Mortgage Bankers Association, there is a big
discrepancy between foreclosure activity in states that require a judge
in the process (judicial) and states that do not (non-judicial). The
MBA reported a rising number of loans in the foreclosure process in
judicial states, but a falling number in non-judicial states during the
first three months of the year. For April, RealtyTrac reports
foreclosure activity down 7 percent from March and down 29 percent from a
year ago. In judicial states, activity was down just 3 percent month to
month but still up 15 percent from a year ago.
judicial/non-judicial split is pushing the foreclosure crisis east, as
some of the worst-hit states like California, Arizona and Nevada are
able to clear through the backlog more quickly. The 11 cities with
annual increases in foreclosure activity were all in the Midwest, South
or on the East Coast, while six of the nine cities with annual decreases
were out West in California, Arizona and Washington, according to
RealtyTrac. California and Nevada, however, still post the top
foreclosure rates, along with judicial Florida.
supply of bank-owned properties in non-judicial states is also falling,
as a growing cadre of investors sweeps in to buy distressed properties
at the courthouse steps. One California Realtor speaking at the National
Association of Realtors’ midyear conference this week told the
conservator of Fannie Mae and Freddie Mac, “We don’t need a bulk REO
sale program, we have no inventory!”
repossessions (REO) are down for the third straight month, according to
RealtyTrac. Lenders took back 51,415 properties in April.