The national foreclosure rate continued to fall in May from the previous month, according to a new report released Thursday.
However, bank repossessions reached a record high during the same month, a sign that lenders are focusing on their backlog of foreclosure inventory before tackling new distressed loans, according to foreclosure database website RealtyTrac, which released the report.
“What it looks like is that the lenders are focusing on processing the delinquent loans they already have rather than initiating new foreclosures,” said Rick Sharga, senior vice president of RealtyTrac. “They’re managing inventory to prevent a free fall in home prices.”
Foreclosure activity dropped 3.27 percent in May from the previous month, and was up 0.45 percent from May 2009. In all, 322,920 properties generated a foreclosure notice. One in every 400 homes in America received a foreclosure notice in May. (Foreclosure notices are defined as a default notice, auction sale notice or bank repossession.)
Bank repossessions (known as real estate owned properties or REOs) hit a record high in May for the second month in a row. Lenders repossessed a total of 93,777 properties during the month, a 1 percent increase from the previous month’s record and a 44-percent jump from May 2009. All 50 states reported a year-over-year increases in REOs, according to RealtyTrac.
So far this year, the U.S. foreclosure rate has been falling slightly on a month-to-month basis. And in April, RealtyTrac reported a year-over-year declinein the foreclosure rate for the first since the firm began reporting data in 2005. RealtyTrac still projects that over 3 million homes will receive a foreclosure notice over the course of this year, said Sharga.
The ten states with the highest foreclosure rates were little changed from the previous month. According to the RealtyTrac report, Nevada remains No. 1 with one in every 79 properties in the state getting a foreclosure notice, five times the national rate.
Arizona ranked second with one in every 169 households receiving a notice, followed by Florida (one in 174 households), California (one in 186 households) and Michigan (one in every 223 households.) (See the full list in our slideshow.)
Vermont had the lowest rate, with one in every 16,454 properties receiving a foreclosure notice.