Signaling the gradual recovery in the housing market, the
foreclosure market report released by RealtyTrac revealed a drop
in the overall foreclosure activity in October 2012 on an annual
basis. As per this leading online marketplace of foreclosure
properties, foreclosure filings plummeted 19% from the last-year
month but rose 3% from the prior month. This brought the
aggregate number of properties receiving default, auction or
repossession notices to 186,455.
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Further, foreclosure starts - default notices issued and
foreclosure auctions (depending on the state's foreclosure
procedure) - declined 19% from October 2011 but inched up 2% from
September 2012 to 89,209 properties in the reported month. This
was the 3rd straight monthly decline in foreclosure starts on a
year-over-year basis. Yet, bank repossessions (REOs) plummeted
21% from the prior-year month and almost 1% from the last month
to 53,478 properties, marking the 24th straight monthly fall in
REOs on an annual basis.
Moreover, in the reported month, the top 10 states with the
highest foreclosure rates were Florida, Nevada, Illinois,
California, Arizona, Georgia, Ohio, Colorado, South Carolina and
Michigan. Further, the states with largest annual rise in overall
foreclosure activity included New Jersey, New York, Connecticut,
Maryland, Ohio and Illinois.
The recent decline in foreclosure activity is largely driven by
the switching of mortgage servicers and the government to other
options - short sale, refinancing of loans and loan modifications
- to prevent foreclosures. Moreover, gradually stabilizing
housing sector and falling unemployment rate are likely to aid
homeowners to shun foreclosures in the near term.
However, we believe foreclosure activity will accelerate in
judicial states following a $25 billion deal signed between five
mortgage servicers -
JPMorgan Chase & Co.
Bank of America Corporation
), Ally Financial Inc. and
Wells Fargo & Company
) - 49 states' attorneys general and the regulators earlier this
year. This could, in turn, lead to a rise in the overall
foreclosure activity going forward.
Further, in two separate announcements, JPMorgan and BofA have
come up with details related to fulfillment of their respective
obligations related to the above-mentioned deal. As of September
30, 2012, BofA has extended $15.8 billion in mortgage relief to
164,000 homeowners. In the same time-frame, JPMorgan extended $7
billion in relief to 75,000 homeowners.
Now reverting to the main story, RealtyTrac anticipates the
lenders to remain on track to complete foreclosures on 650,000
properties by the end of this year. This is lower than 800,000
foreclosures completed in 2011.
The rate at which properties are entering the foreclosure
procedure is expected to trend down gradually, thereby lifting
the housing prices going forward. Nevertheless, the decrease 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 a chance to regain a solid
foothold if there are sufficient buyers for these properties.