Foreclosure rates fell for the third consecutive month in October, but remained sharply higher than a year ago, according to a new report, with analysts cautioning that the improvement was at best temporary.
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The number of Americans receiving foreclosure notices was down 3 percent on a month-to-month basis, as 332,292 properties generated a foreclosure notice. That was 18.9 percent higher than last October. (Foreclosure notices are defined as a default notice, bank repossession or auction sale notice.)
“It’s good to see that foreclosures have slowed down marginally, but we don’t really think it’s a trend,” said Rick Sharga, vice president of marketing at foreclosure tracking Web site RealtyTrac, which released the report.
Legislation in some states has slowed foreclosures, says Sharga, but the impact will be temporary and won't ultimately prevent most of them. In Nevada, for example, foreclosures dropped 26 percent from the previous month because of new legislation requiring mediation before initiating foreclosure proceedings.
Similar legislation in Illinois postponed foreclosures for a period, but they were back in full force in October. Foreclosure notices shot up 56 percent from the previous month, giving Illinois the sixth highest foreclosure rate of any state. In all, 19,946 properties received a foreclosure notice, the highest monthly total for the state since RealtyTrac began tracking data in 2005.
The data comes a couple of days after the Treasury Department released a report showing that more than 650,000 homeowners have taken trial loan modifications under the Making Home Affordable program, which was announced last February. About one-third of those modifications have been in California and Florida, which also happen to have some of the highest foreclosure rates in the country.
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 80 properties in the state getting a foreclosure notice.
California ranked second, followed by Florida, Arizona and Idaho.
Vermont had the lowest rate, with one in every 20,762 properties receiving a foreclosure notice.
RealtyTrac predicts that 3.2 to 3.4 million properties will go into foreclosure in 2009, up from 2.3 million in 2008.