Voluntary foreclosure freezes by some major lenders have contributed to a sharp decline in sales of foreclosed homes at public auctions, according to a report by foreclosure data company ForeclosureRadar.

ForeclosureRadar’s monthly reports cover California, Arizona, Nevada, Oregon and Washington. The reports break down foreclosure filings and inventories by state, county, city and ZIP code.

When employees of some major banks admitted to signing foreclosure documents without proper verification (so-called "robo-signing"), some lenders in ForeclosureRadar’s coverage area, namely Ally (GMAC), PNC Financial and Bank of America, announced national foreclosure freezes in early October. Ally resumed foreclosure sales on Oct. 18 and Bank of America resumed foreclosing the week of Dec. 6, ForeclosureRadar said.

"The robo-signing controversy continued to play a major role in foreclosure activity through the end of November. A number of foreclosure stats have dropped to levels not seen since 2008 as a result," said Sean O’Toole, CEO and founder of ForeclosureRadar.

"Without news of a corresponding drop in delinquencies, or a major increase in foreclosure alternatives, it is hard to find any reasonable explanation other than robo-signing and the likely self-imposed slowdowns that ensued to complete procedural reviews and other changes at the major servicers."

Over the last two months, the number foreclosure sales at public auction — including those that were sold to third parties and those that went back to the bank — fell 38.7 percent in the Western states and foreclosure starts fell 25.5 percent.

Washington saw the biggest month-to-month sales drop in November, falling 38.1 percent, though Washington was the only state among the five to see sales rise year-over-year, up 29.3 percent. California saw the smallest month-to-month drop last month, down 9 percent, and fell the most on a year-over-year basis, -34.7 percent.

Nevada saw the smallest year-over-year drop in sales last month, down 2.5 percent. Sales were down 22.1 percent from October, however, and an "incredible" 50.5 percent from September, ForeclosureRadar said. Similarly, Oregon‘s foreclosure sales fell 54.3 percent last month from September. Sales in the state fell 26.7 percent month-to-month and 18.2 percent year-over-year.

Arizona saw more modest decreases: sales fell 14.8 percent month-to-month and 14.7 percent year-over-year.

Even as sales fell throughout the Western states, inventories of REO (bank-owned) homes continued to swell. In Arizona, REO inventory had increased by 47.8 percent from November 2009, to 32,145 properties. In California, inventory rose 15.2 percent year-over-year, to 112,000. In Nevada, inventory rose 11 percent, to 16,393.

In Oregon and Washington, inventory skyrocketed by 60 percent and 62.8 percent, respectively. Washington posted 11,497 REO properties, while Oregon had slightly less than half that.

"Since September 2008, the foreclosure process has seen significant bottlenecks, first due to government intervention and now lender ineptitude," O’Toole said in a statement. "Unfortunately, the resulting delays will only serve to extend the time it takes to recover and return to a normal housing market."

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