Foreclosure defaults Are Rising AgainForeclosure default notices are on the rise as the economy continues to take its toll and lenders become more aggressive as they move past the processing problems that have plagued foreclosures for more than a year.
Default notices increased 10 percent in October over September following a 14 percent in the third quarter over the second. In September, default notices were down 10 percent from a nine-month high in August, according to the latest report from RealtyTrac.
However, defaults are still but still down 23 percent from October 2010, though the year-over-year difference has been shrinking in recent months.
Default notices increased more than 25 percent on a month-over-month basis in several states, including Florida (28 percent), Pennsylvania (50 percent) and Indiana (61 percent). Despite the sizable monthly increases, default notices were down on a year-over-year basis in all three of these states. Default notices in states using the judicial process reached an 11-month high of 39,282 in October, a 16 percent increase from the previous month, but still down 31 percent from October 2010.
Total foreclosure activity- default notices, scheduled auctions and bank repossessions – also rose 7 percent in October over September, but is still down nearly 31 percent from October 2010.
The several-month rise in default notices reverses a two year trend of falling defaults and suggests more foreclosures may be in store for 2012 and 2013 than previously predicted.
“The October foreclosure numbers continue to show strong signs that foreclosure activity is coming out of the rain delay we’ve been in for the past year as lenders corrected foreclosure paperwork and processing problems,” said James Saccacio, chief executive officer of RealtyTrac. “However, recent state court rulings and new state laws keep changing the rules of the foreclosure game on the fly, creating more uncertainty in the housing market and threatening to prolong the road to a robust real estate recovery.”
Foreclosure auctions were scheduled on 85,321 U.S. properties in October, up 8 percent from the previous month, but still down 38 percent from October 2010. Scheduled auctions in states using the judicial foreclosure process (NFS) reached an 11-month high of 25,941 in October, a 22 percent increase from the previous month, but still down 43 percent from October 2010.
Scheduled auctions increased more than 35 percent on a month-over-month basis in several states, including Florida (57 percent), Minnesota (43 percent) and Illinois (38 percent), although scheduled auctions in all three of those states were still down from October 2010.
Lenders repossessed a total of 67,624 U.S. properties (REO) in October, a 4 percent increase from the previous month, but still a 27 percent decrease from October 2010. REO activity increased 40 percent or more on a month-over-month basis in several states, including Michigan (40 percent), Oregon (45 percent), New Jersey (48 percent), and Indiana (73 percent).
Despite a 34 percent month-over-month drop in foreclosure activity, Nevada posted the nation’s highest state foreclosure rate for the 58th straight month in October. One in every 180 Nevada housing units had a foreclosure filing during the month, still more than three times the national average despite the drop-off in activity. The month-over-month decrease in Nevada was driven by a 75 percent monthly decrease in new default notices, likely the result of a new law that as of took effect in October and requires foreclosing lenders to sign and record in public records an affidavit with key information about anythe foreclosure on it. The 1,201 new defaults in Nevada in October was the lowest since June 2006, a 64-month low.
California default notices increased 17 percent from the previous month to a 13-month high, helping the state post the nation’s second highest foreclosure rate: one in every 243 housing units with a foreclosure filing in October. A total of 29,240 default notices were reported in California in October, a 1 percent increase from October 2010 – the first year-over-year increase in defaults in California since November 2009.
Arizona posted the nation’s third highest state foreclosure rate in October: one in every 259 housing units with a foreclosure filing during the month. Total foreclosure activity in Arizona increased nearly 18 percent from the previous month, but was still down 36 percent from October 2010.
A sharp monthly increase in new default notices and scheduled auctions boosted the foreclosure rate in Florida to fourth highest among the states, up from sixth highest in September. A total of 15,234 new default notices were reported in Florida in October, up 28 percent from the previous month and a 12-month high. Scheduled auctions in Florida hit an 11-month high in October, with 10,655 reported during the month – up 57 percent from September.
New default notices in Michigan also reached a 12-month high in October, increasing 13 percent from the previous month, and the state posted the nation’s fifth highest foreclosure rate for the month: one in every 282 housing units with a foreclosure filing.
The top five states in terms of foreclosure rate in October – Nevada, California, Arizona, Florida and Michigan – accounted for 53 percent of the national total for the month.
Other states with foreclosure rates ranking among the top 10 were Georgia, Illinois, Idaho, Oregon and Colorado.
After 22 consecutive months with the highest foreclosure rate among metropolitan areas with a population of 200,000 or more, Las Vegas dropped to No. 5 on the list in October thanks to a 36 percent decrease in foreclosure activity from the previous month. The overall decrease in Las Vegas was caused primarily by an 80 percent drop in new default notices from September to October. One in every 162 Las Vegas housing units had a foreclosure filing in October, still more than three times the national average.
With one in every 143 housing units with a foreclosure filing in October, Stockton, Calif., took the top metro foreclosure rate away from Las Vegas. Foreclosure activity in Stockton increased 10 percent from the previous month, but was still down nearly 18 percent from October 2010. New defaults in Stockton were up 20 percent from the previous month and up 9 percent from October 2010.
Five other California metro areas had foreclosure rates that ranked among the top 10 in October. Modesto was close behind Stockton at No. 2 (one in every 148 housing units with a foreclosure filing), followed by Vallejo-Fairfield at No. 3 (one in every 150 housing units), Riverside-San Bernardino at No. 4 (one in every 155 housing units), Sacramento at No. 7 (one in every 176 housing units), and Merced at No. 9 (one in every 200 housing units).
Other metro areas with foreclosure rates in the top 10 were Saginaw, Mich., at No. 6 (one in every 174 housing units), Cape Coral-Fort Myers, Fla., at No. 8 (one in every 190 housing units), and Orlando, Fla., at No. 10 (one in every 208 housing units).