Foreclosure filings increased during the third quarter of 2011, marking the first quarter they rose since the fourth quarter last year, according to data released today by RealtyTrac. Banks filed default notices, scheduled auctions, or repossessed a total of 610,337 properties during the quarter — or 1 in 213 properties.
The hike in activity suggests that the fallout from the robo-signing controversy that surfaced during fall 2010 has subsided, and that lenders can move faster than before when dealing with problem properties, said RealtyTrac CEO James Saccacio. Irvine, Calif.-based Realtytrac still expects that this year between 2 million and 2.1 million properties will undergo foreclosure, 30 percent less than 2010. But going forward, he says, more foreclosures are forthcoming.
“There is evidence that this temporary downward trend is about to change direction, with foreclosure activity slowly beginning to ramp back up,” Saccacio said. “The increase in overall foreclosure activity was fueled by a 14 percent jump in new default notices, indicating that lenders are cautiously throwing more wood into the foreclosure fireplace after spending months spent trying to clear the chimney of sloppily filed foreclosures.”
There’s no denying that the distressed property market is enormous, with 12 million properties underwater and 5.1 million homes delinquent or in the foreclosure process. Saccacio says there could be three to four years’ worth of at-risk home inventory to sell. But Saccacio says he doesn’t expect a proverbial a crush of properties to hit the market, even though there’s more than 13 months’ worth of bank-owned housing in the wings.
“Banks are evaluating how to dispatch the properties,” he says. “I don’t feel there’s going to be a flood.”
Other takeaways from the RealtyTrac report:
- The process is slow, typically taking 336 days. The entire foreclosure process now takes an average of 336 days, according to third quarter data. That’s up from 318 days during second quarter, and the slowest pace in nearly four years. New York foreclosures took an average of 986 days from start to finish, the slowest process. Foreclosures in Texas, however, averaged 86 days, the fastest.
- Sales of foreclosed homes take a long time. Foreclosure sales (often short sales) during third quarter took an average of 318 days to sell, up from 245 days in second quarter. Bank-owned properties took about 193 days to sell, up from 178 days.
- Default notices rise while auctions and lender foreclosures fall. Default notices were filed on 195,878 properties, up 14 percent from second quarter, and down 27 percent from the same quarter last year. Auctions were scheduled for 217,929 properties, down 6 percent from the prior quarter and down 41 percent from last year. Lender foreclosures totaled 196,530 properties during third quarter, down 4 percent from second quarter and 32 percent from last year.
- Some surprise states. A cluster of states showed major gains in REO (or lender-owned) foreclosure activity during the quarter. Massachusetts saw a 62 percent gain in REO activity from second quarter, Oregon saw a 47 percent gain, Georgia saw a 42 percent gain, and Illinois saw a 27 percent gain.
- No-surprise states. The states with the highest foreclosure rates were familiar. The top 10 in ascending order: Nevada, California, Arizona, Georgia, Florida, Utah, Michigan, Idaho, Illinois and Colorado.