Robo-signing backlog hitting judicial foreclosure states

RealtyTrac: Florida once again has nation's highest foreclosure rate

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Foreclosure activity nationwide hit a nearly five-year low in the third quarter, though a stark difference remains between judicial and non-judicial foreclosure states, according to a report from foreclosure data aggregator RealtyTrac.

Default notices, scheduled auctions, and bank repossessions were filed on 531,576 properties in the third quarter, or one in every 248 U.S. housing units — the lowest number of filings since fourth-quarter 2007, when 527,740 properties received filings. Filings fell 13 percent from third-quarter 2011 — the ninth straight quarter with a year-over-year decrease.

Filings fell 16 percent on an annual basis in September, to 180,427 — the lowest monthly total since July 2007.

The nationwide decreases in foreclosure activity in September and the third quarter as a whole were mainly due to declines in states where the foreclosure process is not primarily handled by the courts, called non-judicial foreclosure states.

Of the 24 states where the non-judicial foreclosure process dominates, 20 posted annual decreases in foreclosure activity in the third quarter, RealtyTrac said.

These included Nevada (71 percent decrease), Oregon (63 percent), Utah (60 percent), Virginia (34 percent), California (29 percent), Michigan (28 percent), Arizona (23 percent), Colorado (21 percent), Georgia (20 percent) and Texas (17 percent).

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Meanwhile, 14 out of the 26 states with primarily a judicial foreclosure process bucked the national trend last quarter, posting annual increases in foreclosure activity.

These included New Jersey (130 percent increase), New York (53 percent), Indiana (36 percent), Pennsylvania (35 percent), Connecticut (34 percent), Illinois (31 percent), Maryland (28 percent), South Carolina (16 percent), North Carolina (14 percent), and Florida (14 percent).

Two judicial foreclosure states to see annual decreases in foreclosure activity were Massachusetts (16 percent decrease) and Wisconsin (12 percent decrease).

 

Source: RealtyTrac. 

"We’ve been waiting for the other foreclosure shoe to drop since late 2010, when [the legal repurcussions of] questionable foreclosure practices slowed activity to a crawl in many areas," said Daren Blomquist, vice president at RealtyTrac, in a statement.

At the national level, at least, the other shoe "is instead being carefully lowered to the floor and therefore making little noise in the housing market," Blomquist said. But it’s "dropping quite loudly in certain states, primarily those where foreclosure activity was held back the most last year."

Foreclosure starts in California, a non-judicial foreclosure state, hit a 69-month low in September, declining 45 percent from a year ago.

By contrast, foreclosure starts in Florida, a judicial foreclosure state, rose 24 percent year over year last month — the 11th straight month to see an annual increase.

 

Source: RealtyTrac.  

Florida had the highest foreclosure rate among states for the first time since April 2005 last month. Foreclosure activity in the state rose 14 percent in the third quarter from the same period the year before. One in every 117 housing units in the state were subject to a foreclosure filing last quarter.

Arizona had the second-highest foreclosure activity rate with 1 in every 125 units receiving a filing. California had the third-highest rate, also with 1 in every 125 units receiving a foreclosure filing.

Blomquist said recent legislation could delay foreclosures in some non-judicial foreclosure states in the near future. Nevada, Oregon, California, and Georgia have all enacted legislation within the past year adding more requirements for lenders to properly foreclose.

"Several states where the foreclosure flow was not so dammed up last year could see a roller-coaster pattern in foreclosure activity going forward because of recent legislation or court rulings that substantively change the rules to properly foreclose," he said.

"A backlog of delayed foreclosures will likely build up in those states as lenders adjust to the new rules, with many of those delayed foreclosures eventually hitting down the road."

The average number of days it took to foreclose on a property in the third quarter rose to its highest level since the first quarter of 2007: 382 days, up from 336 days in third-quarter 2011. New York had the longest foreclosure timeline — 1,072 days — followed by New Jersey, Florida and Illinois.

 

Source: RealtyTrac.   

States where recent legislation and court ruling have extended the foreclosure process have seen their foreclosure timelines increase substantially from a year ago, RealtyTrac said.

These included Oregon (up 62 percent to 193 days), Hawaii (up 62 percent to 662 days), Washington (up 62 percent to 248 days) and Nevada (up 42 percent to 520 days), the site said.

Washington state was one of the first states to enact legislation following the so-called robo-signing controversy, passing a law that took effect in July 2011 requiring lenders to offer mediation to homeowners facing foreclosure, RealtyTrac said.

The state was one of only four non-judicial foreclosure states to see foreclosure activity increase last quarter, rising 15 percent from third-quarter 2011.

Foreclosure starts, either default notices or scheduled auctions depending on the state, fell 8 percent year over year last quarter, to 284,720. That decrease reverses an upward trend seen in the second quarter.

Source: RealtyTrac. 


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