In the first quarter of 2012, foreclosure activity has fallen to
the lowest level since the fourth quarter of 2007. This was
reported by RealtyTrac, the leading online marketplace of
foreclosure properties, while releasing its foreclosure market
report. According to the report, foreclosure filings for the
reported quarter dipped 2% from the prior quarter and 16% from the
prior-year quarter, with a total of 572,928 properties receiving
default, auction or repossession notices.
Though there was a drop in foreclosures in the first quarter of
2012, these will surely increase in the upcoming months following
the $25 billion settlement deal that took place between five
mortgage servicers -
JPMorgan Chase & Co.
(
JPM
),
Bank of America Corporation
(
BAC
),
Citigroup Inc.
(
C
), Ally Financial Inc. and
Wells Fargo & Company
(
WFC
), 49 states' attorneys general and the regulators. The deal is
expected to speed up the rate of the foreclosure activities across
the nation, which was almost frozen till now.
The major indicator, which confirmed that the foreclosures will
shot up over the next several months, is the rise in the default
notices issued and foreclosure auctions (depending on the state's
foreclosure procedure). Default notices increased 7% in March 2012
from the previous month, but fell 11% from the prior-year
month.
Additionally, properties foreclosed in the first three months of
2012 took an average of 370 days to complete the foreclosure
process, up from 348 days in the previous quarter. Further, the top
10 states with the highest foreclosure activities were California,
Florida, Illinois, Georgia, Michigan, Arizona, Texas, Ohio,
Pennsylvania and Wisconsin.
Moreover, the primary reason for the dip in overall foreclosures
for the quarter under review is the decline in foreclosure activity
in 24 states with a non-judicial foreclosure process. In these
states, foreclosures declined 8% from December 2011 quarter and 28%
from March 2011 quarter to 329,854 properties.
However, the 26 states, where a judicial foreclosure process is
followed, witnessed an increase in foreclosures. Here, foreclosure
filings surged 8% from the prior quarter and 10% from the
prior-year quarter, with a total of 243,074 properties receiving
default, auction or repossession notices.
In Conclusion
With nearly all the problems related to flawed paper work
getting resolved, the downtrend in foreclosures will get reversed
very soon. Moreover, the settlement deal clearly describes the
procedures to be followed while foreclosing a property. This will
allow the mortgage servicers to step up the foreclosure
activities.
Also, there will be additional pressure on the home prices
across the nation as many properties are expected to come to the
market due to increased foreclosure activities. Though the huge
surge in foreclosures may dampen the housing prices in the
near-term, this will enable the housing market to revive over the
longer term.
Moreover, we hope that there would be enough number of buyers
for these properties; otherwise the housing market will have a
little chance to regain a solid foothold. As for now, we should
gear up to see an exceptional rise in foreclosure activities in the
upcoming quarters.
BANK OF AMER CP (
BAC
): Free Stock Analysis Report
CITIGROUP INC (
C
): Free Stock Analysis Report
JPMORGAN CHASE (
JPM
): Free Stock Analysis Report
WELLS FARGO-NEW (
WFC
): Free Stock Analysis Report
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