By Mike Colpitts
Foreclosure auctions, the final step in the formal bank repossession process increased in October, rising 8% from the prior month as foreclosures in states that require courts to formally approve foreclosures moved higher recovering from bank moratoriums. But Nevada saw a major drop in foreclosures as a result of a new law going into effect.
Default notices were filed against 77,722 U.S. residential properties during the month, representing a 10% increase over September, according to RealtyTrac. Initial default notices surged 61% in Indiana, 50% in Pennsylvania and 28% in Florida, three states that have been devastated by the foreclosure crisis.
“The October foreclosure numbers continue to show strong signs that foreclosure activity is coming out of the rain delay we’ve been in for the past year as lenders corrected foreclosure paperwork and processing problems,” said RealtyTrac CEO James Saccacio. “However, recent state court rulings and new state laws keep changing the rules of the foreclosure game on the fly.”
Despite a month-over-month drop in foreclosure activity, Nevada retained the nation’s highest state foreclosure rate for the 58 th straight month in October. One in every 180 Nevada residential housing units experienced a foreclosure filing, more than three times the national average.
However, the drop in foreclosures in Nevada was triggered by a 75% monthly decrease in new default filings as a result of a new state law that took effect October 1st requiring banks and mortgage servicing companies to provide proof of title or lender ownership of a mortgage to be recorded at the time lenders file to formally foreclose a property in public records.
Only 1,201 new defaults were filed in the state during the month as a result, which makes doing so without proof a felony. The new law is the Nevada legislature’s effort to bring an end to illegal foreclosures in the state, and could pave the way for similar legislation in other states.
In the nation’s most populous state, California defaults rose 17% in October, representing a 13-month high as joblessness and underemployment trouble the state, dragging more homeowners into foreclosure. Some 29,240 default notices were filed during the month, the first year-over-year increase in California since November 2009.
Arizona ranked as the nation’s third highest foreclosure state, while a sharp rise in defaults boosted foreclosures in Florida to the fourth highest in the nation.