Foreclosures hit their lowest level in three years in February, in part because of the continuing confusion and disruption caused by the Robogate scandal last fall and in part because delinquencies have fallen steadily for a year as the economy slowly recovers.
RealtyTrac reported a 14 percent decrease in foreclosure filings from January and a 27 percent decrease from February 2010 – the biggest year-over-year decrease since it began issuing its report in 2005.
“While a small part of February’s decrease can be attributed to it being a short month and bad weather, the bottom line is that the industry is in the midst of a major overhaul that has severely restricted its capacity to process foreclosures. We expect to see the numbers bounce back, but that will likely take several months. And monthly volume may never return to its peak in March 2010 of more than 367,000 properties receiving foreclosure filings.” said James J. Saccacio, chief executive officer of RealtyTrac.
The big news was that a total of 63,165 U.S. properties received default notices (NOD, LIS) for the first time in February, a 16 percent decrease from the previous month and a 41 percent decrease from February 2010. Default notices hit a 48-month low in February and were 55 percent below a peak of 142,064 in April 2009.
Continued decline in defaults is drying up the foreclosure pipeline, a trend that has been partially masked by the peaks and valleys in foreclosure volume caused by Robogate’s disruptions and the coming to market of properties which have been hidden in the shadow inventory.
Total delinquencies, which exclude loans in the process of foreclosure, are now at their lowest level since the end of 2008, according to the Mortgage Bankers Association’s fourth quarter delinquency survey. Mortgages only one payment past due are now at the lowest level since the end of 2007, the very beginning of the recession. Perhaps most importantly, loans three payments (90 days) or more past due have fallen from an all-time high delinquency rate of 5.02 percent at the end of the first quarter of 2010 to 3.63 percent at the end of the fourth quarter of 2010, a drop of 139 basis points or almost 28% over the course of the year. Every state but two saw a drop in the 90-plus day delinquency rate and the two increases were negligible.
“These latest delinquency numbers represent significant, across the board decreases in mortgage delinquency rates in the US,” said MBA Chief Economist Jay Brinkmann.