One in every 381 housing units or 338,836 U.S properties received a foreclosure filing in August according to data released today by RealtyTrac.  This is a 4 percent increase over the 325,229 filings that were reported in July but a decrease of 5 percent from August 2009.  One in every 381 housing units received a foreclosure filing during the month.

RealtyTrac, located in Irvine California, compiles a U.S. Foreclosure Market Report each month from tracking documents filed in all three stages of foreclosure:

  1. 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.
  2. 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.
  3. 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.

Early stage filings continued to decline but were offset by an increase in late phase filings in August. 

Default notices were filed on 96,469 properties, a decrease of 1 percent from July and 30 percent from August, 2009.  This is the seventh straight month during which the current month's filings were lower than a year earlier.  However, default notices increased in California, New York, Indiana, Ohio, and Florida. 

Foreclosure auctions were scheduled for the first time on 147,003 properties, up 9 percent from July and 2 percent year-over-year.

Actual foreclosures, that is homes taken into banks' owned real estate inventories, were the highest in RealtyTrac's reporting history.  95,364 properties were foreclosed, an increase of 3 percent from the July total of 92,858 and 25 percent higher than one year earlier.  The previous peak of 93,777 foreclosures occurred in May of this year.

James J. Saccacio, chief executive officer of RealtyTrac said, "The trend lines of decreasing default notices and increasing bank repossessions converged in August, with virtually the same number of new default notices and bank repossessions for the month - a clear indication that the clogged foreclosure pipeline is being carefully managed on both ends by lenders and servicers.  On the front end, seriously delinquent loans are rolling into foreclosure at an unusually slow rate, while on the back end the dammed-up inventory of properties already in foreclosure is moving to REO in a steady stream rather than a flood - presumably to prevent further erosion of home prices."

Nevada, Florida, and Arizona continued to lead the nation in the rate of filings, with Nevada ranking highest for the 44th consecutive month. One in every 84 housing units in the state received a foreclosure notice during the month, 4.5 times the national average.  Despite the high figures, the state is improving; foreclosure activity was down 25 percent year-over-year for the 11th straight month.

In Florida, one in every 155 homes was the subject of a filing and in Arizona, one in every 165 units.  Other states with high rates of foreclosure were California (1:194) and Idaho (1:222).  Filings in Idaho were up 9 percent from July and 11 percent from a year earlier.

California alone accounted for 20 percent of the total number of filings in the nation with 69,143 recorded, a 3 percent increase from July but a 25 percent decrease from August 2009.  Florida had 56,877 filings, 17 percent of the nation's total, up 2 percent month-over-month but down 46 percent from August 2009.

All ten of the metropolitan areas with the highest foreclosure rates posted year-over-year decreases for the second month in a row.  The top metro area was Las Vegas-Paradise Nevada with one in every 73 units receiving a filing followed by Modesto, California (1:95) and Stockton, California (1:100)

MND has discussed the timing of REO asset disposition and its effect on home prices...

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