Newly initiated foreclosures jumped by one-third in August, a
sign that banks may be stepping up efforts to clear out a backlog
of seriously delinquent mortgages.
Default notices, the first stage of the foreclosure process,
were served on nearly 79,000 residential properties in August,
according to the foreclosure data firm RealtyTrac, up 33 percent
from July. That's the most foreclosures begun in nine months, but
still represents an 18 percent annual decline from August 2010.
Other types of foreclosure actions were down for the month, with
scheduled foreclosure auctions decreasing 1 percent and bank
repossessions down 4 percent from July's levels. The 65,000 bank
repossessions reported in August was a six-month low and is down 37
percent from their peak level of 102,000 in September 2010.
Repossessions to increase soon?
"The big increase in new foreclosure actions may be a
signal that lenders are starting to push through some of the
foreclosures delayed by robo-signing and other documentation
problems," said James Saccacio, chief executive officer of
RealtyTrac. "It also foreshadows more bank repossessions in
the coming months as these new foreclosures make their
way through the process."
The boost in defaults boosted the total for foreclosure filings
of all types by 7 percent for the month.
Banks have been struggling to foreclose on a massive backlog of
seriously delinquent mortgages generated by the collapse of the
housing market and subsequent economic downturn. Some homeowners
remain in their homes despite having not made a mortgage payment in
more than one or two years.
Their efforts suffered a setback last fall when it was revealed
that some had been cutting legal corners in their efforts to hurry
the process along, resulting in what became known as the
rob-signing scandal. Banks implemented more stringent procedures as
a result, but it slowed the process down.
Foreclosures concentrated in five states
Five states continue to account for over half of all U.S.
foreclosure activity, with California, Florida, Michigan, Illinois
and Georgia totaling 53 percent of all foreclosure actions in
August. Meanwhile, Nevada continued to have the nation's highest
foreclosure rate, a position it has held for nearly five years,
with one home in every 118 subjected to a foreclosure filing during
Foreclosure filings in the RealtyTrac survey are defined as
notices of default, scheduled foreclosure auctions and bank
repossessions. The numbers do not include properties that are
already in the foreclosure process but did not advance to a further
stage during the month.