Foreclosure starts and sales dropped in Arizona, California and Nevada during 2010, thanks in part to a dramatic reduction in foreclosure sales attributed to the robo-signing scandal.

According to public records compiled by ForeclosureRadar, foreclosure starts and sales continued to rise in Oregon and Washington, although the increase in foreclosure starts was less dramatic than in the past two years, the company said.

The decline in foreclosure starts in Arizona, California and Nevada was the first annual decline since the foreclosure crisis began, ForeclosureRadar said. The dip in foreclosure sales was also a first for Arizona and Nevada, while foreclosure sales in California declined for a second year in a row.

The first half of 2010 saw foreclosure cancellations rose as homeowners saw more short sales and loan modifications approved, ForeclosureRadar said. Investors flipped foreclosure purchases for profits as buyers hurried to take advantage of tax credits. But as the tax credits expired, the market began to slow.

Foreclosure cancellations also began to drop as the government push for loan modifications waned and short sales slowed with the rest of the housing market, ForeclosureRadar said. In the second half of the year, the robo-signing scandal led to dramatically lower foreclosure sales, including a complete halt by Bank of America for nearly two months.

Collectively, foreclosure starts and sales in the five states tracked in ForeclosureRadar’s year-end summary report both fell below 2008 levels. That’s because Arizona, California and Nevada, which saw improvements, account for the overwhelming majority of foreclosure activity in those states.

Foreclosure starts totaled 611,534 for the year in the five states tracked in the report, a 25 percent decline from 2009. Foreclosure starts were down 18 percent in Arizona, to 119,790; down 33 percent in California, to 338,999; and fell 19 percent in Nevada, to 86,010. Foreclosure starts increased 10 percent in Oregon, to 24,574; and grew 14 percent in Washington, to 42,161.

Foreclosure sales in the five states were down 8 percent from 2009, to 345,927. Arizona saw a 26 percent drop in foreclosure sales, to 70,588; California experienced a 6 percent decline, to 189,810; and foreclosure sales also slipped by 6 percent in Nevada, to 42,828. Oregon saw a 39 percent jump in foreclosure sales, to 16,781, while foreclosure sales in Washington grew 14 percent, to 25,920.

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