Foreclosures Show Biggest 5-Year Drop as Process Slows
Foreclosures activity fell dramatically in November, showing the biggest drop in more than five years, mostly due to a temporary freeze on foreclosures and the holiday slowdown, a report released Thursday said.
Foreclosures fell 21 percent in November from the previous month and 14.4 percent from the year before, according to foreclosure tracking web site RealtyTrac.
Both percentage drops are the highest recorded since RealtyTrac began publishing its reports in 2005. But the drop isn't due to a recovery, RealtyTrac said.
“Part of the decrease can be attributed to a seasonal drop of 7 to 10 percent that typically occurs in November," said RealtyTrac CEO James Saccacio in the report.
The other reason for the decrease is the foreclosure freeze earlier this fall, which continues to slow down the foreclosure process, even though most banks have resumed foreclosures.
"Fallout from the foreclosure robo-signing controversy forced lenders and servicers to hit the pause button on many foreclosures while they scrambled to revamp their internal procedures and revise or resubmit questionable paperwork,” said Saccacio.
A separate report released this week from Moody's said that this year's foreclosure freeze will delay the time it takes to foreclose on a property in 2011 by three months.
"We expect that foreclosure activity in December will remain artificially low, but not as low as November," said Rick Sharga, senior vice president at RealtyTrac. "Foreclosure activity rates will accelerate during the first quarter of 2011 as the lenders and servicers catch up on these delayed proceedings."
RealtyTrac said that one in every 492 American household received a foreclosure notice in November, totaling 262,339 properties, the lowest that number has been since February 2009. (Foreclosure notices are defined as a default notice, auction sale notice or bank repossession.)
Bank repossessions, the final step in the foreclosure process after a home fails to sell at auction, fell 28 percent in November from the previous month and dropped 12 percent from a year ago. In all, 67,428 homes were repossessed by banks in November, a sharp drop from September when bank repossessions topped 100,000 for the first time.
But despite the decline, bank repossessions for the year have already broken 2009’s record, with 980,000 properties repossessed in 2010 so far.
Among the individual states, Nevada had the highest foreclosure rate for the 47th consecutive month, with one in every 99 households receiving a foreclosure notice in November. (Nevada also has the highest unemployment rate in the country.)
Utahhad the second highest rate with one in every 221 households receiving a foreclosure notice. Following Utah were California (one in every 233 households), Arizona(one in every 262 households) and Florida(one in every 267 households). (See the 10 states with the highest foreclosure in our slideshow.)
Vermont had the lowest foreclosure rate in the nation, with one in every 31,262 households receiving a foreclosure notice.