Foreclosure activity increased 4% from July to August with 338,836 U.S. properties receiving default notices, scheduled auctions or bank repossessions, according to RealtyTrac, a firm that monitors the foreclosure market. This means that one in every 381 U.S. homes received a foreclosure filing during the past month.
There is some positive news, however, as foreclosure activity from August 2009 to August 2010 decreased by 5%. The decline was driven almost entirely by the falling rate of default notices - the initial step in the foreclosure process - which fell 30% from 2009 and 1% from July.
Despite the year-over-year decrease, Rick Sharga, senior vice president of RealtyTrac, tells MainStreet the most recent results are “not a good thing.” Bank repossession set a record high for the third time in three months, increasing 3% from the previous month and 25% from last year. In fact, 95,364 properties were repossessed by lenders in August. And according to RealtyTrac, this is the ninth straight month that repossessions have increased on a year-over-year basis.
Similarly, the August total for scheduled foreclosures auctions was the second highest monthly total in the history of the report, which was released for the first time in April 2005. A total of 147,003 properties were auctioned off last month. The only time more properties were on the auction block was in March of this year when 158,105 were put on the block. So, comparatively speaking, the number of auctions held in August increased 9 % over July and 2% year over year.
As for the one spot of good news – the declining rate of default notices - Sharga explains they are actually an indication that the foreclosure pipeline is clogged as lenders are trying to deplete their high inventory before adding to it.
“None of the things that would help us out of this foreclosure mess are in play yet,” Sharga says, explaining that unemployment is still high, home prices are still depressed and buying activity has yet to pick up.