Signaling a gradual recovery in the housing market, the
foreclosure market report released by RealtyTrac revealed a drop
in the overall foreclosure activity in November 2012. As per this
leading online marketplace of foreclosure properties, foreclosure
filings plummeted 19% from the last-year month and 3% from the
prior month. This brought the aggregate number of properties
receiving default, auction or repossession notices to 180,817.
Foreclosure starts - default notices issued and foreclosure
auctions (depending on the state's foreclosure procedure) -
declined 28% from November 2011 and 13% from October 2012 to
77,494 properties in the reported month. This was the lowest
level since December 2006.
Yet, bank repossessions (REOs) grew 5% from the prior-year month
and 11% from the last month to 59,134 properties. This marked the
first year-over-year rise in REOs since October 2010, when
foreclosures were temporarily suspended as a result of detection
of flawed documents used for foreclosing properties.
Though overall foreclosure activity dipped in November, it
increased in 23 states and the District of Columbia on a
year-over-year basis. The top 10 states with the highest
foreclosure rates were Florida, Nevada, Illinois, California,
South Carolina, Ohio, Arizona, Georgia, Michigan and Indiana.
Decline in 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. Nevertheless, in the subsequent months, overall
foreclosures are expected to rise as major lenders -
JPMorgan Chase & Co.
Bank of America Corporation
), Ally Financial Inc. and
Wells Fargo & Company
) - adjust to new rules set under the National Mortgage
Settlement as well as several other laws.
Yet, we believe that gradually stabilizing housing sector and
falling unemployment rate are likely to aid homeowners to shun
foreclosures in the near term. Also, the rate at which properties
are entering the foreclosure procedure is expected to trend down
slowly, thereby lifting the housing prices going forward.
However, the dip in foreclosures is expected to be at an uneven
pace, as processes that are being used in handling them vary from
state to state. Moreover, the housing market will get an
opportunity to regain a solid foothold if there are sufficient
buyers for these properties.
BANK OF AMER CP (BAC): Free Stock Analysis
CITIGROUP INC (C): Free Stock Analysis Report
JPMORGAN CHASE (JPM): Free Stock Analysis
WELLS FARGO-NEW (WFC): Free Stock Analysis
To read this article on Zacks.com click here.