By Mike Colpitts
Formal foreclosures or homes that were repossessed by their lenders accounted for 830,000 U.S. homes in 2011, a huge drop of 24% from 2010, according to real estate data research firm CoreLogic. The decline comes as a result of moratoriums enacted by the nation’s five largest mortgage lenders to study damage from the robo signing scandal, and other judicial delays in many areas of the country.
CoreLogic also says that 1.4 million homes were in the foreclosure inventory at the end of 2011. The foreclosure inventory is the number of homes that are currently in the foreclosure pipeline, including many that will eventually sell as bank assisted short sales and others that will be able to work out financial arrangements with lenders.
Foreclosures are measured against homes with a mortgage, rather than all U.S. homes. Roughly one-third of homes in the nation are owned free and clear of a mortgage.
The resumption of an increasing number of lenders formally foreclosing on homes developed in the last few months of 2011 as mortgage lenders cleared legal obstacles in the foreclosure crisis, and allocated billions of dollars to cover lawsuits and other legal damages expected as a result of faulty foreclosures.
The number of homes in jeopardy of foreclosure classified as seriously delinquent or 90 days or more late on their mortgages, rose a half percent in December compared to the end of 2010.
“The inventory of foreclosed properties has begun to shrink, and the pace at which properties are entering foreclosure is slowing,” said CoreLogic chief economist Mark Fleming. “While foreclosure filings are being curtailed by a variety of judicial and regulatory constraints, mortgage servicers are completing REO sales faster than they are completing foreclosures.”
As part of the deal worked out with the U.S. government, the nation’s five largest mortgage lenders will now treat foreclosure as the last possibility with troubled mortgage customers. The five states with the highest foreclosure inventories are Florida, New Jersey, Illinois, Nevada and New York. Wyoming, Alaska and North Dakota had the lowest numbers of foreclosures.