Foreclosures may be back on the upswing
In the second quarter, more homes entered foreclosure than in the same period in 2011 — the first increase since 2009. The $25 billion mortgage settlement earlier this year means banks are processing more foreclosures, which could hurt home prices.
© Ariel Skelley/Getty Images
Delinquent borrowers take heed: The number of homes entering foreclosure has picked up after last year's slowdown, when banks were forced to overhaul their foreclosure practices.
Foreclosure-data firm RealtyTrac said 311,010 properties started the foreclosure process in the second quarter, a 9% increase from the previous quarter and a 6% increase from the second quarter of 2011 — the first year-over-year jump since the fourth quarter of 2009. Moreover, the trend was fairly widespread, with 31 states posting year-to-year increases. (Bing: How many foreclosures are there in your area?)
Since the $25 billion mortgage settlement earlier this year, "Lenders and servicers are slowly but surely catching up with the backlog of delinquent loans that under normal circumstances would have started the foreclosure last year," RealtyTrac CEO Brandon Moore said in a statement.
Article continues below
This uptick in foreclosure processing will mean more short sales and bank repossessions later this year and early next year, which will dampen home prices slightly, said Mark Zandi, chief economist for Moody's Analytics.
- On our blog 'Listed': California passes 'Homeowner Bill of Rights'
Overall foreclosure activity dropped 8.21% from the same quarter in 2011, with more bank repossessions replaced by short sales, or sales in which the banks agree to take less than the debt owed.
For the first half of the year, 1.05 million U.S. properties posted some kind of foreclosure filing – from notice of default to bank repossession — a 2% increase from the previous six months but down 11% from the first half of 2011.
Foreclosure activity, however, did increase from the six-month period a year ago in 20 states, including:
- Indiana: 32% increase
- Pennsylvania: 24% increase
- South Carolina: 23% increase
- Connecticut: 23% increase
- Florida: 23% increase
- Illinois: 22% increase
"Things got bogged down last year, as lenders were caught red-handed with improper processing procedures," said Daren Blomquist, RealtyTrac vice president, who oversees the quarterly report.
Now, with the landmark $25 billion mortgage settlement among the country's largest lenders, state attorneys general and federal government behind them, lenders are moving on the estimated $1.5 billion in loans that are 90 days or more past due.
State by state
In the first half of this year, Nevada posted the highest foreclosure rate of any state, with 20,618 houses or one in 57 homes reporting a filing. This came despite a 61% decrease from the same period a year earlier. Foreclosure starts also surged 61% from the first quarter to the second quarter, after lenders adjusted to a state law that took effect in October that requires homeowners to have access to any documents used in the foreclosure process.
- MSN Money: Banks accused of foreclosure bias
Arizona had the second-highest foreclosure rate. Its 49,157 properties with at least one foreclosure filing in the six-month period represented one in every 58 homes. That was a decrease of 37% from the same period in 2011 and a 6% drop from the previous six months. Still, foreclosure starts were on the rise in the second quarter, increasing 11% from the first quarter.
Georgia had the third-highest foreclosure rate in the first half, boosted by a 23% increase in foreclosure starts from the same period in 2011 and a 5% uptick between the first and second quarters of this year. In the first six months of this year, 65,342 Georgia properties had at least one foreclosure filing, a rate of one in every 60 homes.
California posted the fourth-highest foreclosure rate in the first half with 213,988 properties or one in every 64 reporting a filing. An 18% year-over-year uptick in foreclosure starts in the Golden State in June, however, boosted its foreclosure rate for the month to the highest level nationwide — one in every 288 homes. This is the first time this has happened since RealtyTrac began issuing its report in January 2005.
Regulators and lawmakers across the country will watch California's foreclosure situation. A new bill that Gov. Jerry Brown signed into law Wednesday, which takes effect in January, has written much of the mortgage settlement with the five major lenders into law and expands it to encompass all lenders.
It is the first state legislation to force banks to end the practice of "dual tracking," or proceeding with the foreclosure process while homeowners are negotiating a modification with their lender. It also requires a single point of contact for homeowners regarding their delinquent home loan. If the lender violates the law, a homeowner can sue.
It could be used as a model for foreclosure reform in other states and is likely to increase the number of short sales and modifications, Blomquist said.
"In an effort to avoid the possibility of such a lawsuit, the lender will be less inclined to repossess the property," he said.
the banks should not be able to package and sell the mortgage debt, but many are forgetting the simple fact that the buyer signed a contrct when he/she got the mortgage. if you dont pay for bill, you get your house taken. and you deserve it.
if you dont pay your rent, you get evicted.
if you dont pay your car payment, they repo it.
whats the difference?
i bought my primary residence four years ago, and while i was approved for a high number, i bought a reasonably priced house i could (and can) afford.
people bitch about the american way, the american way is to work hard an live within your means.
This is the after mat of the GOP and they are waiting to give the homes to the people that enter intoTHE COUNTRY....Close the Gate OBAMA and let America come back together as a perfect union of states....that's is the first step...NO MORE VISA.........NO more food import ....get the American farmer back into order and in business.....we have fake strawberries, watermelons etc...........80% of our foods should be grown here........We are on the way to becomming a 3rd world country and the GOP and the Bushes ..(Father and Son) ARE RESPONSIBLE
When the banks received the monies it should have paid off the homes ...so what to do now that loans are impossible to get ......homes loans are higher because of lates fees, the homes are not valued to equal the loans.... I still say they have been paid in full and need to turn over the deeds so America can get back to normal......ITS THE BANKS THAT ARE HOLDING US HOSTAGE WITH THE HOME LOANS ...adding all sough's of fees that means none thing and guess what you don't know where your loan is setting right now or whom has it ...four or five people are asking you for remodifications
Barry .. in all of your 2008 campaign promises ... one was something that you called: "The Foreclosure Prevention Act" What happened to that?? Do you just toss this stuff out there with no thoughts of actually keeping your promises? Are you that much of a scam artist and scum bag?
Well ... yeah .. actually I guess you realy are. So, there really is no way to tell if your are telling the truth or lying? How sad is that? Isn't that embarrassing for you?
2 days ago new home starts were up 5%. The only dogs buying are foreigners and union healthcare bags.
Over 100 fund raisers in the last 6 months.
JOBS COUNCIL MEETINGS -- 0
He's been too busy, we're told.
And if you think that's something,
wait till his second term !
Why worry about the middle class, Obama says they are doing just fine.
That's what the INTELLIGENT people believe. Just ask them.
..The private sector is FINE....
my local Illinois newspaper has six jobs in the want ads and seven PAGES of foreclosures
everything looks fine from AF1 or the golf course, doesn't it mr. rockstar president?
Stop the presses!!! I thought the Master of Disaster , The guy who knows how to throw a party at the Fun House, I mean White House say's housing is on the up and up. LOL! You elected him not me you nitwits.
What exactly was the multi billion dollar bailout for, seems to me that the banks who excepted that money should have applied that money to these unpaid mortgages. Instead, the banks are reaping even more money on foreclosures.
At the very least let the homeowner repay without interest, that would definitely lower their monthly payments. And yes, some of the blame does belong to those that weren't thinking when buying or refinancing their homes, but things happen!