NEW YORK (
) -- The pace of foreclosures slowed down significantly in 2011, but that trend was likely short-lived.
, a new wave of foreclosures could be coming in 2012, if the recent spike in "default filings" is any indication.
A total of 3.6 million properties have been lost to foreclosure since the start of the recession in December 2007. In 2011, however, the pace of monthly repossessions slowed down and in fact hit a 44-month low in November at 56,124 according to data provided by
Overall, banks repossessed 25% fewer properties in 2011 compared to 2010. However, much of the slowdown was caused by "foreclosure processing delays" rather than a robust housing recovery, says Daren Blomquist, RealtyTrac's director of marketing communications.
Controversy over "robo-signing"practices caused a flurry of investigations into banks foreclosure practices and have caused mortgage servicers to re-evaluate their procedures, leading to a slowdown in processing.
States where foreclosures are approved through a judicial process are seeing the longest delays. For instance, New York properties foreclosed in the third quarter took an average of 986 days to complete the foreclosure process.
"Those foreclosure processing delays mean much of the foreclosure activity that under normal circumstances would have occurred in 2011 is being deferred to 2012," Blomquist said in an email, pointing to a rise in default filings, which start the foreclosure process.
The number of filings providing notice of default spiked 33% to 78,880 in August and have remained elevated since then.
"This new wave will not bring foreclosure numbers back to the levels we saw in 2010, but they will create a sort of double-peak pattern after the artificial trough in 2011," according to Blomquist.
The foreclosure forecast comes as analysts are beginning to predict a
rebound in housing prices in 2012 as home prices bottom and affordability remains at its best level in decades.
Bank of America
are the nation's biggest mortgage servicers, together accounting for more than 60% of the first mortgages in the country.
rebound in housing might, however, not be sufficient to save Bank of America , which has been the most weighed down by mortgage woes.
The banks are currently negotiating a settlement with Federal and state regulators over foreclosure practices that is expected to hit over $20 billion, with Bank of America likely to bear the biggest share of the costs.
The settlement is however seen as crucial to banks in order for them to be able to resume the foreclosure process and reduce their exposure to legacy troubled mortgages.
--Written by Shanthi Bharatwaj in New York
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