Foreclosure activity fell dramatically in the first quarter of 2011, dropping 15% from the previous quarter and plunging 27% from where it stood in the first quarter of 2010. One in every 191 U.S. housing units received a filing during the period—the lowest level the nation has seen in three years.
Unfortunately, these overly optimistic numbers won’t last long.
“Weak demand, declining home prices, and the lack of credit availability are weighing heavily on the [housing] market, which is still facing the dual threat of a looming shadow inventory of distressed properties and the probability that foreclosure activity will begin to increase again as lenders and servicers gradually work their way through the backlog of thousands of foreclosures that have been delayed due to improperly processed paperwork,” said James J. Saccacio, CEO at RealtyTrac, in a statement Thursday.
And those backlog-clearing wheels have already begun to turn. Although the 50 states’ attorneys general are still working on hammering out a deal with banks over bad foreclosure practices, yesterday federal regulators announced that they had reached a deal with eight of the largest U.S. mortgage servicers, bringing banks closer to being able to kick foreclosure actions back into high gear.
Already foreclosure activity has begun to pick up: March saw a 7% increase in filings from the month before.
“It looks like it will take another quarter to work through all the process-related issues,” wrote Rick Sharga, senior vice president at RealtyTrac, in an email to Builder. In the mean time, he expects to see “a gradual increase in foreclosure activity over the next three months while these issues get resolved and the backlog of files goes through the process, then see levels increase and level off for the balance of the year.”
To put that in perspective, Sharga says that the country averaged about 227,000 foreclosure actions each month for the first quarter of the year, with 72,000 of those being bank repossessions. Once the paperwork and other regulatory issues have cleared, he expects that number to jump up to 300,000 foreclosure actions a month, with bank repossessions accounting for between 90,000 and 100,000 of those filings.
Claire Easley is senior editor, online, at Builder.
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