Signaling a steady recovery in the housing market, the
foreclosure market report released by RealtyTrac revealed a slump
in the overall foreclosure activity in 2012. As per this leading
online marketplace of foreclosure properties, foreclosure filings
slipped 3% from 2011 and plunged 36% from 2010. This brought the
aggregate number of properties receiving default, auction or
repossession notices to 1,836,634.
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Though overall foreclosure activity dipped in 2012, it hiked in
25 states on a year-over-year basis. Out of these, 20 states use
the judicial foreclosure process. Yet, foreclosure activity fell
in 25 states (19 of these states use the non-judicial foreclosure
process) from the 2011 levels. The top 10 states with the highest
foreclosure rates were Florida, Nevada, Arizona, Georgia,
Illinois, California, Ohio, Michigan, South Carolina and
Further, by the end of 2012, above 1.5 million homes were at some
stage of foreclosure process or bank-owned, rising 9% from the
end of 2011, but down 31% from the end of 2010. Nevertheless, the
rise in property prices enabled many homeowners to come out of
negative equity. In Jan 2013, nearly 10.9 million homeowners
across the country were underwater, down from 12.5 million in Jan
Decline in overall foreclosure activity was largely due to the
switching of mortgage servicers and the government to other
options - short sale, refinancing of loans and loan modifications
- to prevent foreclosures. However, the dip in foreclosures is
expected to be at an uneven pace, as processes that are being
used in handling these vary from state to state.
Foreclosure activity is expected to rise in judicial states early
this year as these states have substantial backlogs to clear.
Further, there would be another wave of rise at the end of year
in non-judicial states as major lenders -
JPMorgan Chase & Co.
Bank of America Corporation
), Ally Financial Inc. and
Wells Fargo & Company
) - adjust to the new rules set under the National Mortgage
Settlement as well as several other laws.
Yet, we believe that the gradually stabilizing housing sector and
falling unemployment rate are likely to aid homeowners to avoid
foreclosures in the near term. Also, the rate at which properties
are entering the foreclosure procedure is expected to trend down
gradually, thereby lifting the housing prices going forward.
Moreover, the housing market will get an opportunity to regain a
solid foothold if there are sufficient buyers for these