One has to hope that foreclosure data reported on Thursday by RealtyTrac is a sign that states are wrapping up the foreclosure crisis that has been ongoing since 2008, not that it signals further trouble in the housing sector. The company's U.S. Foreclosure Market Report for both September and the third quarter of 2014 indicate that both defaults and scheduled auctions increased in the third quarter driving overall foreclosure activity to its first quarterly increase in three years.
The increase was small; overall foreclosure filings including default notices, scheduled auctions, and completed foreclosures or bank repossessions increased 0.42 percent form the second quarter to a total of 317,171 and were down 16 percent from the same quarter in 2013. However the increases were at the front end of the foreclosure process. Default notices increased 2 percent from the second quarter and scheduled foreclosure auctions were up 7 percent. These were partially offset by a 12 percent drop in completed foreclosures.
The quarterly uptick, which also includes an increase in scheduled auctions compared to the third quarter of 2013 in 22 states, occurred even as activity in September was down 9 percent from August and 19 percent from September 2013 to the lowest level in 98 months, a total of 106,866 filings. September also marked 4 straight years when foreclosure activity declined during the month when compared to the same month the previous year.
"September foreclosure activity was back to pre-housing bubble levels nationwide, in large part thanks to a continued slide in bank repossessions," said Daren Blomquist, vice president at RealtyTrac. "However, a recent rise in scheduled foreclosure auctions in many markets across the country shows lenders are continuing to clean house of lingering delinquent loans. This rise in scheduled auctions foreshadows a corresponding rise in bank repossessions and auction sales to third party buyers in the coming months."
Default notices were filed on 103,179 U.S. properties in the third quarter, an increase of 2 percent from the previous quarter but still down 11 percent from the third quarter of 2013 - the ninth consecutive quarter where default notices have decreased on a year-over-year basis nationwide.
Foreclosure auctions (NFS, NTS) were scheduled on 139,721 U.S. properties in the third quarter, an increase of 7 percent from the previous quarter but a decrease of 1 percent from the third quarter of 2013 - the 15th consecutive quarter where scheduled foreclosure auctions have decreased on a year-over-year basis nationwide.
Lenders repossessed (REO) 74,271 U.S. properties in the third quarter, a decrease of 12 percent from the previous quarter and down 38 percent from the third quarter of 2013 - the 16th consecutive quarter where REOs have decreased on a year-over-year basis nationwide.
States with the five highest foreclosure rates in the third quarter were Florida, Maryland, New Jersey, Nevada, and Illinois. Despite continuing to be the number one state for foreclosure the activity in that state is waning. Filings were down 4 percent from the second quarter and 17 percent from a year earlier. The situation in Maryland and New Jersey however continues to deteriorate. Filings in the third quarter increased in Maryland on a year-over-year basis for the ninth consecutive quarter and in New Jersey for the 10th. Nevada and Illinois saw activity down 41 percent and 20 percent respectively from the third quarter of 2013.
U.S. properties foreclosed in the third quarter of 2014 were in the foreclosure process an average of 615 days, up 7 percent from the previous quarter and up 13 percent from the third quarter of 2013 to the longest average time to foreclose since RealtyTrac began tracking in the first quarter of 2007. States with the longest average time to foreclose in the third quarter were New Jersey (1,064 days), Florida (951 days), Hawaii (937 days), New York (902 days) and Illinois (889 days).