The flow of homes into the foreclosure pipeline is slowing in five Western states tracked by ForeclosureRadar.com, but lenders are also canceling fewer foreclosures once they’re under way.

The number of foreclosure proceedings initiated by lenders dropped from April to May in California, Arizona, Nevada, Oregon and Washington. At the other end of the pipeline, only California saw bank repossessions and sales to third parties increase in May.

Third-party investors in all five states needed less time to sell foreclosed homes they’d bought at auction, a sign that the slowing foreclosure process has left fewer affordable homes available for sale, said ForeclosureRadar CEO Sean O’Toole.

Shorter turnaround times for investors may be partially due to seasonal spring selling activity, but "we think it has more to do with an overall lack of quality, affordable homes for sale," O’Toole said. "Investors far better fill this need than banks, who put little into cleaning up their properties before sale, or nondistressed homeowners, who are often not motivated to sell at prices homebuyers can now realistically afford."

The flow of homes into the foreclosure pipeline is slowing in five Western states tracked by ForeclosureRadar.com, but lenders are also canceling fewer foreclosures once they’re under way.

The number of foreclosure proceedings initiated by lenders dropped from April to May in California, Arizona, Nevada, Oregon and Washington. At the other end of the pipeline, only California saw bank repossessions and sales to third parties increase in May.

Third-party investors in all five states needed less time to sell foreclosed homes they’d bought at auction, a sign that the slowing foreclosure process has left fewer affordable homes available for sale, said ForeclosureRadar CEO Sean O’Toole.

Shorter turnaround times for investors may be partially due to seasonal spring selling activity, but "we think it has more to do with an overall lack of quality, affordable homes for sale," O’Toole said. "Investors far better fill this need than banks, who put little into cleaning up their properties before sale, or nondistressed homeowners, who are often not motivated to sell at prices homebuyers can now realistically afford."

California

In California, the number of homes hit with notice of default filings — the first step in the foreclosure process — totaled 20,185 in May, down 4 percent from April and 16.5 percent from a year ago.

Notices of auction sale — the homeowner’s last notice before their home is sold to a third-party investor or repossessed by the bank — were up 16.6 percent from April, to 25,564. But auction sale notices were down 9 percent from a year ago.

Lenders canceled more foreclosure auctions in May (14,002) than they completed either through repossessions (11,736) or sales to third parties (3,701).

Foreclosure cancellations were down sharply, however, falling 24.3 percent from April to May, and down 18.2 percent from a year ago.

Bank repossessions were up 3.4 percent from April to May but down 13.6 percent from a year ago. Third-party sales were up 4.1 percent from April but down 7.4 percent from a year ago.

ForeclosureRadar estimated that there were 335,000 California homes in the foreclosure process or in lenders’ real estate owned ("REO") inventory in May.

That includes 117,000 homes making their way through the foreclosure process that had not yet been scheduled for sale, down 5 percent from April and 18.3 percent from a year ago.

Auctions had been scheduled on another 107,000 properties, down 1.6 percent from April and 18.3 percent from a year ago.

At 111,000 homes, REO inventory — homes that have completed the foreclosure process and been repossessed by banks — was essentially unchanged from April, but up 6.3 percent from a year ago.

Homes were taking 30.3 percent longer to work their way through the foreclosure process than a year ago — 344 days — and lenders needed another 227 days on average to resell homes they’d repossessed. Third-party investors were speedier at selling foreclosed homes, closing sales in 134 days on average, down 7.6 percent from April.

Arizona

In Arizona, foreclosure filings were down 6.5 percent from April to May, to 6,066, a 34.3 percent decline from a year ago.

Sales to third parties were up 4.7 percent from April, to 1,753 — a 52.3 percent increase from a year ago. Banks repossessed 4,244 homes, a 9.5 percent drop from April and a 13.7 percent decline from a year ago, and foreclosure cancellations (4,516) exceeded repossessions for the first time since November.

Foreclosure radar estimated that a notice of trustee sale had been filed on 43,268 Arizona homes in May, down 7.9 percent from April and 28.3 percent from a year ago.

Bank-owned, REO inventory shrank 2 percent from April, to 29,685, marking the first time Arizona REO inventory has slipped below 30,000 since June 2010.

The time it took lenders to foreclose on Arizona properties was up 22.8 percent from a year ago, to 178 days, down from a recent peak of 189 days in March.

Compared to the same time a year ago, banks were taking 20 percent longer to resell homes they’d repossessed — 150 days, on average.

Third-party investors cut average resale time to 95 days in May, down 10.4 percent from April and 18.8 percent from a year ago.

Nevada

In Nevada, notices of default were down 13.6 percent from April and 42 percent from a year ago, to 4,101. The number of homes that had been subjected to notice of sale filings was also down 10.7 percent from a year ago, to 5,030.

Banks canceled 2,234 foreclosure proceedings, but repossessed 3,112 homes and sold another 853 to third-party investors.

After peaking at 5,006 in February, foreclosure cancellations fell 35.2 percent from April to May, to a level that was still nearly 26 percent greater than a year ago.

Bank repossessions were down 8.1 percent from April but up 21 percent from a year ago. Sales to third-party investors were down 19.7 percent, but were up 55.1 percent from a year ago.

ForeclosureRadar counted 61,249 Nevada homes in the foreclosure process or in lenders’ REO inventories.

That number includes 33,143 homes whose owners are in default but which have not been scheduled for auction (down 31.7 percent from a year ago), 10,233 homes scheduled for sale (down 13.2 percent from a year ago), and 17,833 homes in banks’ REO inventories (up 21.7 percent from a year ago).

Nevada homes were taking an average of 335 days to wind their way through the foreclosure process in May, up 39 percent from a year ago.

Lenders needed another 177 days, on average, to resell homes in their REO inventories — up 12.7 percent from a year ago. Third-party investors were turning foreclosure properties around in 102 days, on average, down 12.8 percent from April and 23.9 percent from a year ago.

Oregon

In Oregon, notice of default filings were down 5 percent from a year ago, to 1,776.

Although foreclosure cancellations were down 26.9 percent from May 2010, to 533, they still outnumbered bank repossessions, which fell 45.3 percent from a year ago, to 305. Sales to third parties decreased 37.9 percent year-over-year, to 36.

Washington

Washington saw a 21 percent year-over-year decline in notice of trustee sale filings, to 2,669. Foreclosure cancellations were down 25.8 percent from April to May, but up 48 percent from a year ago, to 1,673. Banks repossessed 1,495 homes, down 11.2 percent from April but a 62 percent increase from a year ago. Sales to third-party investors fell 24.5 percent from April and 3 percent from a year ago, to 163.

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