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Why Foreclosure Watchers Should Look at Last Year, Not Last Month

NEW YORK ( TheStreet) -- Call it a tale of two outlooks on the U.S. home foreclosure front - one for the short term and one for the long term.

RealtyTrac, the Irvine, Calif., real estate industry analytical firm, reports this week that home bank repossessions were up by 4% in July.

For sure, that figure bears watching for August and September.

But the big picture tells a different story. Those figures, RealtyTrac reports, are actually down 32% from July 2012.

That's a huge sign that home foreclosures are fading (even though they also are up by 6% in July -- but, again, way down from a year earlier).

The higher monthly numbers may be skewed due to higher foreclosure figures in a handful of states. According to RealtyTrac, foreclosure starts were up significantly in states including Maryland (up 275% since July 2012); Oregon (up 137%); and New Jersey (up 89%).

The numbers skyrocketed in those states largely because legislators and judges have loosened their grip in blocking (or at least slowing down) the rate of home foreclosures for the first time in five years, RealtyTrac says.

"Foreclosures are continuing to boil over in a select group of markets where state legislation and court rulings kept a lid on foreclosure activity during the worst of the housing crisis," says Daren Blomquist, vice president of RealtyTrac. "Still, the foreclosure boil-over markets are becoming fewer and farther between as lenders have caught up with the backlog in some of the states with the more lengthy judicial foreclosure process."

Blomquist points to Illinois, where foreclosures have decreased in each of the past eight months after experiencing 11 straight months of home repossessions, and Ohio, which has seen three straight months of declines after eight straight months of home foreclosure hikes.

RealtyTrac says foreclosures are in major retreat, even though the economic collapse of 2007-08 inflicted huge damage on U.S. homeowners.

"U.S. foreclosure activity in July is 64% below the peak of more than 367,000 properties with foreclosure filings in March 2010, but is still 54% above the historical average of 85,000 properties with foreclosure filings per month before the housing bubble burst in late 2006," Blomquist says. "There are a dozen states, however, where foreclosure activity levels in July were at or below average monthly levels prior to the bubble bursting. Those states include Texas, Colorado, Oklahoma, Indiana and Michigan, and we expect the number of states in this category to increase in the coming months."

That outlook should ease the minds of homeowners still worried about losing their homes to foreclosure. Right now, RealtyTrac says, only about one in 1,000 U.S. homes are in foreclosure proceedings.

Those are odds most homeowners can live with - despite July's likely short-term hiccup.

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