In its monthly foreclosure market report, RealtyTrac stated that
foreclosure activity in April 2012 fell to the lowest level since
July 2007. According to this leading online marketplace of
foreclosure properties, the foreclosure filings for the reported
quarter dipped 5% from the prior month and 14% from the prior-year
period, with a total of 188,780 properties receiving default,
auction or repossession notices.
Considerable decrease in hardest hit foreclosure states, such as
Arizona, Nevada and California, was the primary reason for the
recent fall in overall foreclosure activity, despite a surge in
majority of the states. However, the pace of foreclosure activities
had not slowed down much in many of the non-judicial states; hence,
there were no significant backlogs.
In the reported month, default notices issued and foreclosure
auctions (depending on the state's foreclosure procedure) declined
for the first time this year to 97,665 properties. Default notices
decreased 7% from March 2012 and 2% from April 2011.
Further, bank repossessions (REO) were down 7% from the prior
month and 26% from the prior-year month to 51,415 properties. REO
activity dipped in 28 states from March 2012 and 37 states along
with the District of Columbia posted year-over-year decline.
Another reason for the dip in overall foreclosures for the month
under review is the decline in foreclosure activity in 24 states
and the District of Columbia with a non-judicial foreclosure
process. In these states, foreclosures declined 7% from March 2012
and 29% from April 2011. However, the 26 states that follow a
judicial foreclosure process, witnessed an increase in it on the
year-over-year basis. Here, foreclosure filings surged 15% from the
prior-year month but fell 3% from the prior month.
Conclusion
Though foreclosures have come down in recent times, the
situation will deteriorate going forward. In the coming months,
foreclosure activities are bound to rise 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 pace of the foreclosure activities, which
was almost frozen till now.
However, with mortgage servicers finding other options - short
sale and loan modifications - to prevent foreclosure, we believe
that foreclosure activity would take time to show an upward trend.
When all these alternatives would be exhausted, only at that point
a property would be foreclosed.
Once the foreclosure activity gains pace, there would be no
looking back. Also, there will be additional pressure on the home
prices as many properties would to come to the market due to the
surge in foreclosure activities.
Though the huge leap in foreclosures may dampen the housing
prices in the near-term, this will enable the revival of the
housing market 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 in the market.
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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