Foreclosure Crisis Causes Drop In Repossessions
NEW YORK (
) -- Temporary foreclosure freezes at some large U.S. mortgage servicers have begun to show up in foreclosure activity, but the country's foreclosure pain may not end for years, according to RealtyTrac.
The firm, which has a comprehensive database of foreclosure data, announced Thursday that overall foreclosure filings declined by 4% in October. Bank repossessions - known as real-estate owned, or REO - fell an even more drastic 9% on a monthly basis.
The drop in foreclosure activity reflected delays at major servicers like
Bank of America
(BAC) - Get Report
,
JPMorgan Chase
(JPM) - Get Report
and
GMAC
, which put in place temporary moratoriums as they got their arms around the "robosigning" scandal. Major competitors like
Citigroup
(C) - Get Report
and
Wells Fargo
(WFC) - Get Report
are also coping with the fallout of sloppy documentation practices and other errors.
Rick Sharga, senior vice president of RealtyTrac, says the numbers don't yet reflect the full impact of delays. The impact could linger at least through November, since states that require court approval were still seeing the impact of foreclosures begun in earlier months.
"I think we may see some more delayed reaction to the foreclosure freeze in next months' numbers," said Sharga. "Some of the judicial states where we know there have been delays, like Florida, actually had marginal increases in foreclosure activity. So it's likely that because it just takes longer to process all through the court systems that we may not actually see the effect of these delays til next month."
The firm said that 332,172 U.S. homes received foreclosure filings in October, or roughly one in every 389 homes. Filings have remained at an elevated level - above 300,000 each month - for nearly two years.
RealtyTrac doesn't expect to see foreclosure filings topping out for several months due to the heightened levels of vacant and unsold property, nor does it expect a turnaround in residential real-estate for at least a few years.
"We don't think we're going to peak statistically until 2011," says Sharga. "And it's probably not going to be until 2014 when we'll have finally exhausted most of the distressed inventory and the markets can finally turn around."
States with the highest foreclosure rates were:
Nevada, with one in 79 homes receiving a notice; Florida, with one in 155 homes; Arizona, with one in 165 homes; California, with one in 201 homes; and Michigan, with one in 235 homes.
States with the biggest increases in foreclosure filings were:
South Dakota, up 46%; Iowa, up 31%; Massachusetts, up 44%; New Mexico, up 39%; Rhode Island, up 31%; and Kansas, up 25%.
States with the lowest foreclosure rates were:
Vermont, with one in 14,210 homes receiving a notice; North Dakota, with one in 6,395 homes; West Virginia, with one in 5,989 homes; Wyoming, with one in 3,285 homes; and South Dakota, with one in 3,143 homes.
States that saw the biggest improvement in foreclosures were:
Kentucky, where filings dropped 30% from the previous month; Idaho, where filings dropped 27%; and Vermont, South Carolina and Hawaii, where filigns dropped 24%.
-- Written by Lauren Tara LaCapra in New York
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