RealtyTrac said today that 1,045,801 default notices, auction sale notices and bank repossessions (REO) were filed during the first two quarters of 2012.  This was an increase of 2 percent from the total in the last two quarters of 2011 but 11 percent below filings during the first half of last year.  Filings affected 0.79 percent or one in every 126 housing units in the U.S during the most recent six month period.

The second quarter had fewer foreclosure filings than the first quarter but the pattern changed.  REO filers were down but there was a 9 percent increase in foreclosure starts to 311,010 filings during the second quarter, also an increase (6 percent) from one year earlier.  This was the first year-over-year increase in quarterly foreclosure starts since the fourth quarter of 2009.   June was the 21^st consecutive month in which overall foreclosure activity was lower than during the same month a year earlier but the month also saw an annual increase in foreclosure starts for the second month in a row.  

 "Additional scrutiny on how lenders and servicers process foreclosures, along with aggressive foreclosure prevention efforts by the federal government and several state governments, continue to keep a lid on the foreclosure problem at a national level," said Brandon Moore, CEO of RealtyTrac. "Still, foreclosure starts began boiling over in more markets in the first half of the year, particularly in the second quarter, when rising foreclosure starts spread from primarily judicial foreclosure states in the first quarter to more than half of all non-judicial foreclosure states in the second quarter.

"Lenders and servicers are slowly but surely catching up with the backlog of delinquent loans that under normal circumstances would have started the foreclosure process last year, and that catching up is why the average time to complete the foreclosure process started to level off or decrease in some states in the second quarter," Moore added. "The increases in foreclosure starts in the first half of the year will likely translate into more short sales and bank repossessions in the second half of the year and into next year."

Twenty states saw a decrease in foreclosure filings in the first half of the year compared to the same period in 2011.  These included Indiana, down 32 percent; Pennsylvania, 24 percent; Connecticut and Florida 23 percent each, and Illinois 22 percent.  Foreclosure starts increased in 31 states, 17 using judicial foreclosure and 14 with non-judicial processes.

The process of foreclosure continued to lengthen with an average foreclosure in the second quarter taking 378 days from the initial notice compared to 370 days in the first quarter.  This was the longest average in the five plus years RealtyTrac has been keeping records.   There were improvements however in a few states where the process had been especially protracted.  In New York the average time decreased from 1,056 days in the first quarter to 1,001 in the second, a 5 percent drop and in New Jersey the time decreased 3 percent.  Those two states still have the first and second longest foreclosure periods.

Bank-owned (REO) properties that sold in the second quarter took an average of 195 days to sell from the time they were foreclosed, up from 178 days in the first quarter; the longest sale times were in New York, 430 days, Arkansas 357 days, and New Jersey 354 days.  Short sales completed during the second quarter took an average of 319 days from the time properties entered the foreclosure process, up from 306 days in the first quarter.  New York again was in first place with the average short sale taking 788 days followed by New Jersey at 753 days and Connecticut at 630.

Nevada continued its run as the state with the most foreclosure activity although it posted 61 and 43 percent decreases from the first and last halves of 2011.  A total of 20,618 properties in the state or one in 57 had at least one filing during the first half of 2012.

Arizona's foreclosure activity in the first half of 2012 decreased 37 percent from the same period in 2011 with 1.73 percent of  housing units or one in 58 receiving one of 49,157 filings. Georgia had the third highest rate of foreclosure activity in the second quarter, up 5 percent from the previous quarter and 23 percent from a year earlier.  There were 65,342 Georgia properties affected by filings in the first six months of the year or one in every 63 housing units.