RealtyTrac reported this morning that foreclosure filings in the third
quarter of 2010 rose 4 percent from the previous quarter but were down 1
percent from the same period in 2009.
930,437 homes, one in every 139 U.S. housing units received a
foreclosure filing during the quarter.
In September, the last month of the quarter, some form of foreclosure
document was filed on 347,420 housing units, up 3 percent from August and 1
percent from September 2009. RealtyTrac, located in Irvine
California, compiles a U.S. Foreclosure Market Report each month from tracking
documents filed in all three stages of foreclosure:
- Notice of
Default (NOD) and Lis Pendens (LIS). This is the first
legal notification from a lender that the borrower on a mortgage loan has
defaulted under the terms of their mortgage and the lender intends to
foreclose unless the loan is brought current.
- Auction -
Notice of Trustee Sale and Notice of Foreclosure Sale (NTS and NFS); If the borrower does
not catch up on their payments the lender will file a notice of sale (the
lender intends to sell the property). This notice is published in local
paper and contains information pertaining to the date, time and subject
property address.
- Real Estate
Owned or REO properties : "REO"
stands for "real estate owned" and typically refers to the
inventory of real estate that banks and mortgage companies have foreclosed
on and subsequently purchased through the foreclosure auction if there was
no offer higher than the minimum bid.
Notices of Default: While foreclosure activity
remains high, the early stage filings continue to decline. During the third quarter a total of 269,647
properties received default notices, down one percent from Q2 and 21 percent
from the same quarter in 2009 when default notices peaked at over 342,000.
Auctions: Foreclosure sales were scheduled for the first time on
372,445 properties which sets a record for RealtyTrac's reports. This was an increase of 5 percent from the
second quarter and 4 percent from a year earlier.
Real Estate Owned: For the
first time in RealtyTrac's history bank repossessions (actual foreclosures) topped 100,000 in a
single month, reaching 102,134 in September.
Third quarter figures also set a record with 288,345 repossessions, an
increase of 7 percent from the previous quarter and 22 percent above
repossessions in the third quarter of 2009
Foreclosure sales continue
to make up a significant portion of the larger real estate market. Preliminary data for September indicates that
these sales, both REO and pre-foreclosure sales - represented 31 percent of all
home sales and REO alone accounted for 18 percent. In those 24 judicial foreclosure states
impacted by the moratoriums, nearly a third of home sales were foreclosure
related although RealtyTrac data does not differentiate between pre-foreclosure
sales which would be less affected by the documentation problems and REO sales.
Foreclosure activity
continues to be dominated by Nevada, Arizona, and Florida. One in every 29 housing units in Nevada
received a foreclosure filing during the third quarter and activity increased
by 1 percent quarter-to-quarter but declined 20 percent year-over-year. In
Arizona, one in every 55 housing units received a filing and in Florida it was
one in 56 units.
In actual numbers,
California led the nation with 191,016 filings, 21 percent of the nation's
total, but this was down slightly from Q2 and was 24 percent lower than a year
earlier. Florida however, saw a jump of
12 percent from Q2 and was virtually unchanged from the previous year. 157,026 properties received a notice during
the quarter.
The current moratorium on
foreclosures announced by several major banks will probably have a significant
impact on foreclosure figures when the October report is issued. RealtyTrac states in its current release that
foreclosure activity in the 24 judicial foreclosure states which were initially
affected by the underlying documentation problems accounted for 40 percent of
all foreclosure activity in the third quarter and 36 percent of property
repossessions or REO.
"Lenders foreclosed
on a record number of properties in September and in the third quarter, taking
a bite out of the backlog of distressed properties where the foreclosure
process was delayed by foreclosure prevention efforts over the past 20 months,"
said James J. Saccacio, chief executive officer of RealtyTrac. "We expect to
see a dip in those bank repossessions - and possibly earlier stages of the
foreclosure process - in the fourth quarter as several major lenders have
halted foreclosure sales in some states while they review irregularities in
foreclosure-processing documentation that has been called into question in
recent weeks."
"If the lenders can resolve
the documentation issue quickly, then we would expect the temporary lull in
foreclosure activity to be followed by a parallel spike in activity as many of
the delayed foreclosures move forward in the foreclosure process," Saccacio
said. "However, if the documentation issue cannot be quickly resolved and
expands to more lenders we could see a chilling effect on the overall housing
market as sales of pre-foreclosure and foreclosed properties, which account for
nearly one-third of all sales, dry up and the shadow inventory of distressed
properties grows - causing more uncertainty about home prices."