Banks Repossesions Rise, New Foreclosures Down

By:
Peter King | June 10, 2010

Overall foreclosure activity fell in May, even as the number of homes actually repossessed by lenders hit an all-time high that month, according to today’s monthly report from RealtyTrac. 

The results suggest that lenders are finally working through a backlog of distressed properties that has been building up since the beginning of the housing crisis, even as the number of properties that are entering the front end of the foreclosure process is decreasing.
 
Bank repossessions hit a record high for the second month in a row, rising to 93,777, a 1 percent increase over April’s figures. At the same time, the number of homes subjected to notices of default, the first step in the foreclosure process, fell 7 percent to 96,462.
 
It was the lowest level of new defaults since November 2008 and down 32 percent from the high of 142,064 new defaults recorded in April 2009. Total foreclosure actions – notices of default, scheduled sheriff’s auctions and bank repossessions – were at 322,920 in May, a decline of 3 percent from April’s level.
 
“The numbers in May continued and confirmed the trends we noticed in April: overall foreclosure activity leveling off while lenders work through the backlog of distressed properties that have built up over the past 20 months,” said James J. Saccacio, chief executive officer of RealtyTrac.
 
“Lenders appear to be ramping up the pace of completing those forestalled foreclosures even while the inflow of delinquencies into the foreclosure process has slowed,” he added.
 
Although record numbers of homeowners have been falling behind on their mortgages and going into foreclosure since the housing crisis began, lenders have been moving relatively slowly to actually take possession of distressed properties. This is due in part to the sheer number of properties involved, but also to measures intended to prevent or forestall foreclosures, including state moratoria, the federal Home Affordable Modification Program (HAMP) and lender’s own reluctance to foreclose on what is often seriously depreciated properties.
 
There have been a number of indications lately that banks were beginning to clear out their foreclosure backlogs, including a sharp increase in the number of homeowners rejected for permanent loan modifications under HAMP.
 
Nevada continued to have the nation’s highest foreclosure rate, despite a nearly 12 percent decline from April’s level, with one home in 79 subject to at least one of the three types of foreclosure actions. Arizona, Florida and California continued to hold down the next three spots.
 
Ten states accounted for 70 percent of all foreclosures, led by California, where 72,030 homes were subjected to foreclosure actions. Florida was second, with 50,685, followed by Michigan with 20,322. Rounding out the list were Arizona, Illinois, Nevada, Georgia, Texas, Ohio and New Jersey.

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