REALTYTRAC: January 2012 U.S. Foreclosure Market Report: Frozen Up Foreclosure Process Begins to Thaw

  • By David M. Kinchen
REALTYTRAC: January 2012 U.S. Foreclosure Market Report: Frozen Up Foreclosure Process Begins to Thaw

The just released January 2012 foreclosure market report from Irvine, CA-basedRealtyTrac (www.realtytrac.com) shows foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 210,941 U.S. properties in January. That was a 3 percent increase from the previous month but still down 19 percent from January 2011. The report also shows one in every 624 U.S. housing units with a foreclosure filing during the month.

“Although overall foreclosure activity was down from a year ago for the 16th straight month in January, we continue to see signs on a local and regional level that the frozen-up foreclosure process is beginning to thaw,” said Brandon Moore, CEO of RealtyTrac. “Foreclosure activity increased on a year-over-year basis for the first time in more than 12 months in Florida, Illinois, Indiana and Pennsylvania, following a pattern we saw in late 2011 in states such as California, Arizona and Massachusetts.

“We expect the pattern of increasing foreclosures to continue in the coming months, especially given the finalized mortgage and foreclosure settlement reached in early February between 49 state attorneys general and five of the nation’s largest lenders,” Moore continued. “The settlement sets forth clear guidelines for lenders and servicers to follow when foreclosing, which should allow them to push through some of the delayed foreclosures from last year. Other roadblocks to foreclosure are still in place at the state level, however, including legislation altering the foreclosure process and lawsuits against lenders. We expect to see somewhat uneven trends in local and regional foreclosure numbers going forward as lenders work through these additional legislative and legal roadblocks.”

Default notices were filed for the first time on a total of 58,362 U.S. properties in January, unchanged from the previous month but down 22 percent from January 2011.

Default notices increased more than 20 percent on a year-over-year basis in several states, including Connecticut (23 percent), Massachusetts (27 percent), Florida (36 percent), Maryland (100 percent) and Pennsylvania (112 percent). Florida default notices increased on an annual basis for the third straight month, and default notices in Pennsylvania reached a 15-month high.

Foreclosure auctions were scheduled on 86,037 U.S. properties in January, up 1 percent from December, but still down 20 percent from January 2011.

Scheduled auctions increased more than 20 percent on a year-over-year basis in several states, including Minnesota (24 percent), Massachusetts (57 percent), South Carolina (79 percent), Indiana (141 percent) and Illinois (141 percent). Minnesota scheduled auctions increased on an annual basis for the third straight month, and scheduled auctions reached a 17-month high in Indiana and a 15-month high in Illinois.

Lenders repossessed (REO) a total of 66,542 U.S. properties in January, an 8 percent increase from December but still a 15 percent decrease from January 2011.

REO activity increased at least 30 percent on a year-over-year basis in several states, including Wisconsin (30 percent), Connecticut (39 percent), Illinois (52 percent), Indiana (60 percent), New Hampshire (62 percent) and Massachusetts (75 percent). REO activity increased on an annual basis for the fourth straight month in Massachusetts and for the third straight month in Wisconsin and Illinois. REO activity in January reached a 16-month high in Illinois and a 15-month high in Indiana.

With one in every 198 housing units with a foreclosure filing in January, Nevada posted the nation’s highest foreclosure rate for the 61st straight month — despite an 8 percent decrease in foreclosure activity from December. A total of 5,931 Nevada properties had a foreclosure filing in January, down 52 percent from January 2011 and a 52-month low.

California foreclosure activity dropped to a 50-month low in January, but the state still posted the nation’s second highest foreclosure rate: one in every 265 housing units with a foreclosure filing during the month. A total of 51,584 California properties had a foreclosure filing in January, down 23 percent from January 2011

Arizona foreclosure activity increased 14 percent from the previous month, helping the state post the nation’s third highest foreclosure rate: one in every 325 housing units with a foreclosure filing during the month. A total of 8,749 Arizona properties had a foreclosure filing in January, down 44 percent from January 2011.

The year-over-year drops in foreclosure activity in Nevada, California and Arizona were driven by low foreclosure starts in all three states. In Nevada, default notices averaged fewer than 1,200 per month from October through January after averaging more than 4,000 per month in the first nine months of 2011. In California, default notices averaged fewer than 18,000 per month in December and January after averaging more than 28,000 per month from August through November. In Arizona, scheduled auctions (the first foreclosure notice in the state) averaged fewer than 4,300 per month in December and January after averaging more than 7,500 per month in the previous 12 months.

Foreclosure starts were also at low levels in Oregon, where scheduled auctions dropped to a 40-month low, and in Washington, where scheduled auctions averaged fewer than 1,000 per month from October through January after averaging more than 2,100 per month in the first nine months of 2011.

One in every 328 Georgia housing units had a foreclosure filing in January, the nation’s fourth highest state foreclosure rate, and one in every 354 Michigan housing units had a foreclosure filing, the nation’s fifth highest state foreclosure rate.

Other states with foreclosure rates ranking among the top 10 were Florida, Illinois, Delaware, Colorado and Indiana.

Nine out of the nation’s 10 highest foreclosure rates among metropolitan areas with a population of 200,000 or more were in California. The only exception was Las Vegas, which ranked No. 5 with one in every 172 housing units with a foreclosure filing in January.

Reporting one in every 140 housing units with a foreclosure filing during the month, Stockton, Calif., posted the nation’s highest metro foreclosure rate for the fourth month in a row, followed by Modesto at No. 2 (one in every 143 housing units), Riverside-San Bernardino at No. 3 (one in 164 housing units), and Vallejo-Fairfield at No. 4 (one in every 168 housing units).

Only four cities in the top 20 metro foreclosure rates posted annual increases in foreclosure activity: Lansing-East Lansing, Mich. (20 percent increase); Orlando (55 percent increase); Chicago (13 percent increase); and Miami (21 percent increase). 

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