Foreclosure Rising Tide Ebbs in February

NEW YORK ( TheStreet) -- Foreclosure activity dipped nationally in February, but the numbers point to a rising tide, according to the latest report from RealtyTrac.

Total foreclosure filings including notice of default, scheduled auctions and bank repossessions, fell 2% from the previous month to 206,000 and was down 8% year-on-year.

It was the lowest annual decrease since October 2010. In fact, the report noted that while a dip in the larger states dragged down the overall numbers, 21 states posted annual increases in foreclosure activity, the most since November 2010.

"The foreclosure and mortgage settlement filed in court earlier this week will help pave the way to a properly functioning foreclosure process by providing a clear roadmap for necessary foreclosures," Brandon Moore, CEO of RealtyTrac. "That should result in more states posting annual increases in the coming months. Not surprisingly, many of the biggest annual increases in February were in states with the more bureaucratic judicial foreclosure process, which resulted in a larger backlog of foreclosures built up over the last 18 months in those states."

Bank of America ( BAC), JPMorgan Chase ( JPM), Citigroup ( C), Wells Fargo ( WFC) and Ally Financial struck a $26-billion nationwide settlement with state and federal regulators over alleged foreclosure practices.

The Department of Housing and Urban Development's Office of the Inspector General released a report earlier this week that found banks violated servicing standards and foreclosure procedures and engaged in wide-spread robosigning.

The banks agreed to follow new servicing standards as well as offer relief to borrowers by providing $10 billion in principal reductions, $3 billion in refinancing loans and $7 billion in offering alternatives to foreclosure.

Foreclosures in the 26 states with a judicial foreclosure process increased 24% over the year-ago period, while activity in the 24 states that follow a non-judicial foreclosure process dropped by 23%.

Foreclosure activity in Nevada, California and Arizona continue to top state foreclosure rates, although activity in Nevada fell to a 58-month low. One in every 278 Nevada housing units had a foreclosure filing during the month, more than twice the national average.

Other states with foreclosure rates ranking among the top 10 were Illinois, Michigan South Carolina, Ohio and Wisconsin.

--Written by Shanthi Bharatwaj in New York

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