Foreclosures Drop Two Straight Months

By Mike Colpitts

Demonstrating the U.S. largest five banks are following rules agreed to in their $25 billion settlement with 49 state attorney generals, foreclosure foreclosures saw a drop for two straight months in March as lenders increased efforts with home mortgage holders, according to RealtyTrac.

The drop in foreclosure activity showed there were 198,853 filings against U.S. residential properties during the month, a 4% decline from February and a 17% drop from a year ago. March totals represented the lowest monthly figure since July 2007.

An increase in bank assisted short sales is developing in the marketplace as lenders work with homeowners to sell their homes in greater numbers at less than what is owed on a mortgage as a result of the government’s agreement with state attorney generals. However, the slowdown does not indicate a major transformation in the foreclosure crisis.

“There are hairline cracks in the dam, evident in the sizable foreclosure activity increases in judicial foreclosure states over the past several months, along with an increase in foreclosure starts in many judicial and non-judicial states in March,” said RealtyTrac CEO Brandon Moore.

“The dam may not burst in the next 30 to 45 days, but it will eventually burst, and everyone downstream should be prepared for that to happen both in terms of new foreclosure activity and new short sale activity.”

Foreclosure activity rose in states that require courts to approve foreclosures. Judicial states posting some of the biggest year-over-year increases in activity in the first quarter included Indiana (45 percent), Connecticut (38 percent), Massachusetts (26 percent) and Florida (26 percent).

However, the drop in foreclosure activity resulted from decreasing foreclosure starts in states that use the non-judicial foreclosure process. The 24 states with the District of Columbia, had 329,854 properties with foreclosure filings in the first quarter of the year, more than half the nation’s total.

Driven by a law that went into effect earlier this year requiring mortgage servicing companies to prove they hold title to a home before starting legal foreclosure proceedings, Nevada foreclosure activity dropped 26% in the first quarter, but the state still posted the nation’s top foreclosure activity.