Foreclosure filings down 12% in September
New state laws slowing foreclosure process
By Inman News, Thursday, October 23, 2008.New state laws that require loan servicers to give advance notice before filing a notice of default helped push down foreclosure-related filings by 12 percent nationwide in September, data aggregator RealtyTrac said today.
California, which accounts for nearly one-third of foreclosure activity, passed legislation that took effect in September requiring lenders to make contact with borrowers 30 days before filing a notice of default. Notices of default in California dropped 51 percent in September, with a corresponding "significant impact" on national numbers, RealtyTrac said.
RealtyTrac said notices of default fell 66 percent in North Carolina, a state that now requires lenders to provide homeowners and the state commissioner of banks 45 days' advance warning of plans to file a notice of default.
Lenders file notices of default as the first step in the foreclosure process, in most cases after borrowers fail to make two or more payments. A notice of default starts the clock ticking on a forced auction sale or bank repossession of a delinquent borrower's home.
Foreclosure-related filings include default notices, auction sale notices and bank repossessions. Because many borrowers refinance, get current again on their loans, or negotiate a short sale or loan modification with their lender, not all properties subjected to filings are actually repossessed or sold by lenders.
But in many instances, the new laws governing notice of default filings may only delay lenders from initiating the foreclosure process.
After a new Massachusetts law took effect in May requiring that lenders give homeowners a 90-day right-to-cure notice, initial foreclosure filings were lower than normal for the following three months. But initial foreclosure filings were up 465 percent from August to September, RealtyTrac said, as the first loans subject to the new rule emerged from the 90-day window.
Nationwide, RealtyTrac counted foreclosure related-filings on 265,968 properties in September, down 12 percent from August but up 21 percent from a year ago.
At the state level, Nevada saw foreclosure-related filings jump 11 percent in September. The rate of foreclosure-related filings in Nevada -- one for every 82 homes -- was the highest in the nation, and more than five times the U.S. average of one filing per 475 homes.
With one filing for every 178 homes, Florida moved from fourth place to second on the list of states with the highest foreclosre rates.
In California, the dramatic decline in notices of default contributed to a 32 percent decrease in foreclosure-related filings. Still, one in 189 homes was subjected to a filing, the third-highest rate in the nation.
Arizona, Georgia, Michigan, Ohio, New Jersey, Indiana and Colorado rounded out the list of the 10 states with the highest foreclosure rates.
For the third quarter, RealtyTrac counted foreclosure filings on 765,558 homes, up about 3 percent from the second quarter and 71 percent from a year ago.
Six states -- California, Florida, Arizona, Ohio, Michigan and Nevada -- accounted for more than 60 percent of foreclosure-related filings.
The 10 cities with the highest foreclosure rates among the nation's 100 largest metropolitan areas in the third quarter were located in California, Florida, Arizona and Nevada.
They were Stockton, Calif.; Las Vegas, Nev.; Riverside-San Bernardino, Calif.; Bakersfield, Calif.; Fort Lauderdale, Fla.; Phoeniz, Ariz.; Sacramento, Calif.; Orlando, Fla.; Fresno, Calif.; and Oakland, Calif.
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Submitted by Steve Simon on October 23, 2008 - 4:19am.
Abosulte Political Bull!
A new law requiring more notice before default is filed!
You have to be kidding...
We are closing on a deal next week where the sellers haven't paid anything on their mortgage for over a year; what they need is more notice...
California, and other States think the answer to this problem is providing yet more delays before accountability start? What are they thinking?
I am sickened by this "I didn't know" defense that seems to completely absolve the borrower from all sin. This fits perfectly well with the campaigns being run (more Mr. O than Mr. M) for president. Both have a basket of money for those who have done nothing right, and do not deserve the hard earned dollars of those that did everything right.
Talk to someone that remembers Fidel's rise to power, you'll hear about how they recall some of the same rhetoric...
Just my thought, and this is (for now) still America, I am entitled to them :)
If the answer to a complex problem is very simple, it is usually incomplete...
Steve Simon is the lead instructor at the Steve Simon School of Real Estate www.stevesimon.us
Submitted by John Allen on October 23, 2008 - 4:45am.
It was a sad day when NC gave defaulters more time to destroy the home they bought and could not afford. It WAS so much easier and quicker for the home to be sold before. I'm licensed in both Carolinas and the foreclosure process is fair, but different, in both states. Who really believes adding 30 - 90 days to the process does anything but add costs to lenders and drives the neighborhood value down?
Submitted by Ross Milroy on October 23, 2008 - 7:57am.
It is unfortunate that these laws are being enacted in several states to further delay what is already a long and arduous process. In Miami-Dade County, for example, it takes up to 12 months to complete the foreclosure process and confirm the sale. These delays are not, however, the sole result of these new notice requirements. With such a huge backlog of properties in pre-foreclosure, lenders are also purposefully delaying the process to avoid the additional financial burdens of paying up on real estate taxes and condo maintenance fees. This is putting a HUGE strain on condo associations, which in turn are having to re-assess those owners in good standing, and unfortunately, forcing more owners to default. I am dealing with several situations where liens have been filed against associations, which either stalls or outright cancels the foreclosure sales to cash buyers, as they cannot obtain marketable title to the property.
To learn more about the Florida Foreclosure Law, please refer to my blog or web site at http://www.miamiangelproperties.com/blog/blog
Submitted by Sean OToole on October 23, 2008 - 11:40am.
Expect to see more of these delays and even foreclosure moratoriums. We are hearing that a number of major lenders are internally considering foreclosure moratoriums in the hopes that it will give markets a chance to recover - minimizing their losses.
We are already seeing Countrywide canceling record numbers of foreclosures - and seeing evidence they are modifying loans to terms like 2% interest only for 5 years. Won't ultimately fix the fact that the owner can't afford the house on reasonable terms and likely only ensures we will continue to have high rates of foreclosure for years to come.
Sean O'Toole
Founder / CEO
ForeclosureRadar.com
ForeclosureTruth.com
Submitted by Larry Wright on October 23, 2008 - 1:17pm.
All these are excellent points. But I'm starting to see owners defaulting because they're victims of the times. These are honest, hard working borrowers that have lost jobs and/or depleated their life's savings. They're homes' market values have fallen below the outstanding loan balance so a short sale or forclosure seems inevitable. Lenders can do more to maintain property values by restructuring loans and proactively decreasing foreclosure rates. Mandated foreclosure delays may, or may not be a good thing.
Larry Wright
www.nwrealty.com
www.nwrealty.net