The monthly foreclosure market report released by RealtyTrac
revealed a marginal rise in the overall foreclosure activity from
the prior month. As per this leading online marketplace of
foreclosure properties, foreclosure filings for August escalated 1%
from the last month but declined 15% from the prior-year month.
This brought the total number of properties receiving default,
auction or repossession notices to 193,508.
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On the other hand, foreclosure starts - default notices issued and
foreclosure auctions (depending on the state's foreclosure
procedure) - surged 1% from July 2012 but decreased 13% from August
2011 to 99,405 properties. This was the first monthly dip in
foreclosure starts after recording a rise for the last three
months. Moreover, foreclosure starts increased in 18 states on an
Additionally, bank repossessions (REOs) fell 2% from the prior
month and 19% from the last month to 52,380 properties. This was
the 22nd straight monthly fall in REOs on a year-over-year basis.
Also, REO activity slipped annually in 35 states and the District
of Columbia. However in the upcoming few months, REOs are expected
to rise as there has been huge elevation in foreclosure starts over
the last year.
Further, the top 10 states with the highest foreclosure rates were
Illinois, Florida, California, Arizona, Nevada, Georgia, Ohio,
Michigan, Delaware and Colorado. Moreover, the foreclosure activity
waned in 24 non-judicial states and District of Columbia, while 15
non-judicial states and Washington DC reported a monthly
Overall, foreclosure activity has been accelerating in judicial
states after the $25 billion deal was signed between five mortgage
JPMorgan Chase & Co.
Bank of America Corporation
), Ally Financial Inc. and
Wells Fargo & Company
) - 49 states' attorneys general and the regulators earlier this
year. In a report released by the official monitoring the
implementation of the deal, it was stated that the five banks have
provided nearly $10.6 billion in relief during the period ranging
from March 1 to June 30.
Nevertheless, foreclosure activity has been falling in most
non-judicial states as they did not create a significant backlog of
pending foreclosure cases over the last two years, when
foreclosures were halted in almost all the judicial states.
Furthermore, a number of steps - short sale and loan modifications
- are being undertaken to prevent foreclosures. Also, the Consumer
Financial Protection Bureau (CFPB) has come up with a new set of
proposals to ensure that the procedures (related to payment
collections and foreclosures) followed by the mortgage servicers
lead to more transparency for the borrowers.
A spurt in foreclosure starts indicates that there would be
potential rise in short sale, where the homeowner sells the
property at a lower amount than owned on his/her loan. Also, others
could be repossessed by the banks and placed on the market at a
significant discount. Thus, many properties are likely to end up
adding to the foreclosure inventory, which is expected to
jeopardize the recovery of the overall housing property market in
the near future.
Though the leap in foreclosures may dampen the housing prices in
the near-term, this will enable the housing market to revive in the
longer term. Moreover, the housing market will get a chance to
regain a solid foothold if there are sufficient buyers for these