Completed Foreclosures Hit New High in August
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- Peter King | September 16, 2010
A record number of homes were lost to foreclosure in August, even as the number of homeowners initially defaulting on their mortgages continued to decline.
More than 95,000 homes were foreclosed upon in August, according to foreclosure tracking firm RealtyTrac, the highest monthly total since the company began reporting the figures in 2005. The figure represents a 3 percent increase from July and a 25 percent annual rise since August 2009.
It’s the ninth consecutive month that bank repossessions have increased on an annual basis, as lenders work through a backlog of bad loans that have been piling up since the mortgage crisis began. At the same time, new defaults have been steadily decreasing, in part because of declining rates of delinquency, but also because banks are seeking to limit the number of properties in the foreclosure process.
Banks seeking to manage numbers
“The trend lines of decreasing default notices and increasing bank repossessions converged in August, with virtually the same number of new default notices and bank repossessions for the month — a clear indication that the clogged foreclosure pipeline is being carefully managed on both ends by lenders and servicers,” said James Saccacio, RealtyTrac CEO.
“On the front end, seriously delinquent loans are rolling into foreclosure at an unusually slow rate, while on the back end the dammed-up inventory of properties already in foreclosure is moving to REO in steady stream rather than a flood — presumably to prevent further erosion of home prices,” he added.
REO is an abbreviation for real-estate owned, the industry term for foreclosed properties reclaimed by the lender.
Foreclosures, defaults in opposite trends
New defaults and completed foreclosures have been moving in opposite directions for most of the past year. Over 96,000 properties received new default notices in August, a drop of 30 percent from August 2009 and the seventh consecutive month that new defaults declined on an annual basis. On a monthly basis, the total was down only 1 percent from July.
Scheduled foreclosure auctions were up 9 percent compared to July, to a total of 147,000, representing a 2 percent annual increase from August 2009.
All told, 399,000 U.S. homes were in some stage of the foreclosure process in August, or one in 381. The total represents an increase of 4 percent over July, but a 5 percent decline from one year ago.
Most foreclosures concentrated in five states
Five states continued to account for over half of all foreclosure activity, with California and Florida making up 37 percent of the total. Michigan, Illinois and Arizona each represented another 5 percent each.
Nevada continued to have the nation’s highest foreclosure rate, one in 84 homes, despite a 25 percent reduction over the past year and 11 straight months of declining foreclosures.
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