Bank Repossessions Rise Sharply

By:: Kara Johnson | April 15, 2010

Foreclosure actions have risen sharply in the early months of 2010, as lenders appear to be moving toward clearing out a backlog of distressed properties.

Foreclosure filings of all types rose 19 percent in March, affecting 367,000 U.S. properties, according to data released today by RealtyTrac, a foreclosure tracking company. It’s the highest monthly total reported since the collapse of the housing bubble and a 9 percent increase over March 2009.

On a quarterly basis, filings in the first three months of 2010 were up 7 percent from the final quarter of 2009, affecting 932,000 properties, or one in every 138 U.S. homes. The figure represents a 16 percent increase from the first quarter of 2009.

The totals are based on filings at three separate points in the foreclosure process: default notices, scheduled auctions and bank repossessions. Of the three, the last represents when the home is actually surrendered.

The increase was significantly tilted toward the final stages of the foreclosure process, said RealtyTrac CEO James Saccacio, suggesting that lenders are beginning to clear out a backlog of distressed homes that have built up over the past year.

Repossessions way up, but new defaults flat

Compared to the first quarter of 2009, bank repossessions were up by 35 percent and scheduled auctions were up 12 percent. The 258,000 bank repossessions and 370,000 auctions scheduled in the first three months of 2010 represented increases of 9 percent and 12 percent, respectively, over the last quarter of 2009. Both are the highest quarterly totals reported since the foreclosure crisis began.

At the same time, new defaults remained relatively flat in the first quarter of the year, with 305,000 homes receiving default notices, an increase of 1 percent from the previous quarter and down 1 percent from the first quarter of 2009. Notice of default is the first stage of the foreclosure process, when the homeowner is notified the home will be repossessed if the mortgage loan is not made current.

Many homes have remained in the default stage during the past year owing to measures like foreclosure moratoriums and efforts to arrange loan modifications through the government’s Home Affordable Modification Program (HAMP). As those moratoriums end or ineligible homeowners are denied loan modifications, more are being scheduled for auction or repossessed by lenders.

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