Foreclosure filings at lowest level in 56 months
Analysts caution that the first-quarter data don't indicate the crisis is over, noting that the number of foreclosure starts has increased in each of the past four months.
Foreclosure filings in the first quarter of this year were at the lowest level in more than four years, but analysts say that doesn't mean the foreclosure crisis is over.
Continuing a trend from the previous quarter, the number of foreclosure filings continued to fall, according to first-quarter 2012 data from RealtyTrac.
The number of properties that were the subject of a foreclosure action — a default notice, scheduled auction or bank repossession — fell to 572,928 for the quarter. That was down 2% from the last quarter of 2011 and down 16% from the first quarter of 2011.
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That means that one in every 230 U.S. housing units was the subject of a foreclosure filing during the first quarter.
While the decline in foreclosure filings has held for two quarters, that trend is not likely to continue, RealtyTrac analysts cautioned.
"The low foreclosure numbers in the first quarter are not an indication that the massive reservoir of distressed properties built up over the past few years has somehow miraculously evaporated," Brandon Moore, chief executive officer of RealtyTrac, said in a news release.
He noted that foreclosure activity has picked up considerably in states with mandated judicial foreclosures, where the robo-signing crisis had previously slowed the process. The number of foreclosure starts nationwide increased 7% from February to March, the fourth straight month of increase. That indicates cracks in the dam, Moore said.
"The dam may not burst in the next 30 to 45 days, but it will eventually burst, and everyone downstream should be prepared for that to happen — both in terms of new foreclosure activity and new short-sale activity," Moore said.
The 26 states that require foreclosures to go through the courts posted an 8% increase in foreclosure action from the previous quarter and a 10% increase over the first quarter of 2011.
States with the most notable increases year to year include:
- Indiana: 45%
- Connecticut: 38%
- Massachusetts: 26%
- Florida: 26%
- South Carolina: 26%
- Pennsylvania: 23%
By contrast, foreclosure filings declined in nonjudicial-foreclosure states, where the process was not slowed as much by document issues, in most cases. States with the most notable declines year to year include:
- Arkansas: 79%
- Nevada: 62%
- Washington: 55%
- Arizona: 41%
- Texas: 31%.
- California: 21%
On realtytrac.com statistics show that for every house on the market there are an average of 7 being "warehoused," and being trickled to the market.
These "warehoused" homes are where people are anywhere from from 2 months late to over 2 years behind on their mortgage but foreclosure process hasn't started.
A lot of them are forclosed on but the owners are still in them and the banks are OK with that for now. If they opened the floodgates prices will totally collapse.
It is long from over.
A lot of mortgages are resetting higher in the next 18 months and they will demand a LOT more in principle payment above and beyond your low interest payment, forcing people into foreclosure. Some people will see their payment double.
By the way they are not modifiing anyone. That is all eye candy for the election.
The banks win big. Any losses they incur are reimbursed by the government agencies.
About Teresa Mears
Teresa Mears is a veteran journalist who has been interested in houses since her father took her to tax auctions to carry the cash at age 10. A former editor of The Miami Herald's Home & Design section, she lives in South Florida where, in addition to writing about real estate, she publishes Miami on the Cheap to help her neighbors adjust to the loss of 60% of their property value.