Foreclosures Drop, But For How Long?

By:
Kirk Haverkamp | December 16, 2010

Foreclosures fell abruptly in November, with total activity down by 21 percent from the month before, but that isn’t necessarily a strong sign for the housing market.

Foreclosure filings of all types were reported on 262,000 U.S. properties in November, down from 332,000 the month before, according to figures released today by RealtyTrac. It was the first time the tally dropped below 300,000 since February 2009 and the biggest one-month drop the company has reported in five years of tracking foreclosure data.
 
Bank repossessions fell to 67,000, down 28 percent for the month and 12 percent from November 2009. Notices of default, the first stage in the foreclosure process, dropped to 79,000, down 31 percent for the month and 21 percent on an annual basis.
 

Reductions may be short-lived

 
However, much if not all of the decline may be due to temporary factors, such as several major lenders suspending foreclosures in the wake of the robo-signing foreclosure documentation scandal. RealtyTrac CEO James Saccacio explained why.
 
 “While part of the decrease can be attributed to a seasonal drop of 7 to 10 percent that typically occurs in November, fallout from the foreclosure robo-signing controversy forced lenders and servicers to hit the pause button on many foreclosures while they scrambled to revamp their internal procedures and revise or resubmit questionable paperwork,” Saccacio said.
 
The November rate represented a 14 percent annual decline from November 2009, which was also the largest annual decline the company has recorded.
 

Despite trend, some big increases

 
While most states saw significant monthly declines in foreclosures, several that have been enjoying relatively modest foreclosure rates saw steep increases on both a monthly and annual basis. South Carolina saw an increase of 26 percent for the month and 75 percent for the year, and now ranks 12th among all states in foreclosure activity.
 
Foreclosure activity in Kansas was up 34 percent for the month and 75 percent of the year, and now ranks 25th among U.S. states, although RealtyTrac cautions that changes in data collection may be partly responsible for the increase. And Alabama showed a 39 percent increase for the month, although its rate is up only 28 percent for the year and currently ranks 23rd in the nation.
 

Utah moves up to second-worst rate

 
Most of the state’s with the nation’s highest foreclosure rates saw significant declines for the month, with the exception of Utah, where a 17 percent monthly gain vaulted it from sixth to second on the list. Foreclosure activity in Utah is now up 60 percent over the past year, to nearly 4,300 filings in November.
 
Nevada continued to have the nation’s worst foreclosure rate for the 47th consecutive month, despite a 20 percent drop in filings for November. California had the third highest rate while Arizona and Florida remained in the top five despite monthly declines of roughly 40 percent.
 

Foreclosures concentrated in 10 states

 
In absolute numbers, 10 states accounted for 70 percent of all U.S. foreclosure activity, with California alone taking a 22 percent share, with 57,000 filings in November. Florida was second with 33,000 and Michigan was third with 15,000 during the month. Georgia, Texas, Illinois, Nevada, Ohio, Nevada and Pennsylvania rounded out the list.
 
Foreclosure filings in the report include notices of default, scheduled foreclosure auctions and bank repossessions. Because several months may pass between different stages of the process, the RealtyTrac figures do not reflect the total number of U.S. homes in the foreclosure process.

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