RealtyTrac, the leading online marketplace of foreclosure properties, released its November foreclosure market report on Thursday. According to the report, foreclosure filings for the month dropped 3% from the prior month and 14% from the prior-year month with a total of 224,394 properties receiving notices of default, auction or repossession during the reported month.
Though there was a rise in the number of property auctions, new defaults and repossessions by banks continued to decline in November. Issuance of default notice, the first step in the foreclosure process, fell 8% month over month and 9% year over year to 71,730. Similarly, the final stage, i.e. bank repossessions, slipped both 17% from the previous month and the year-ago month to 56,124 properties.
However, in November, foreclosure auctions were at a 9-month high level. Foreclosure auctions grew 13% from October 2011 but declined 17% from November 2010 to 95,540 properties. The surge in default notices over the last few months are now being scheduled for auctions, leading to a rise in the number of properties in the auction process.
Though the overall foreclosure activity went down, the November data shows that there will be a surge in foreclosure activity over the next year with the banks and mortgage servicers starting to clear their backlog. They have already stepped up their resources to the fullest and started taking action against defaulting homeowners.
This came more than a year after the banks and mortgage servicers, including JPMorgan Chase & Co. (JPM), Bank of America Corporation (BAC) and Ally Financial Inc., had temporarily suspended foreclosures across the country. The main reasons behind the halt and decline in foreclosure activity were flawed paperwork, delays due to process held up in courts, re-filing of earlier filed foreclosure cases, enquiries by regulatory agencies and reluctance of lenders to take back properties resulting from declining home sales.
Further, a combination of various measures – loan modifications, lender-borrower mediations and mortgage payment assistance for the unemployed – were also taken up by national and state-level regulators to allow distressed home owners to successfully avoid the chances of foreclosures.
Now, with many of the problems related to flawed paper work getting resolved, the temporary down trend in foreclosures is about to get reversed. This shows that bank repossession is expected to rise in 2012.
With many properties coming on to the market due to increased foreclosure activities, it would put an additional downward pressure on the home prices across the country. We believe there would be enough number of buyers for these properties; otherwise the housing market will have little chance to regain a solid foothold. However for now, we should gear up to witness an exceptional rise in foreclosure activities over the coming months.
