March Sees 5-Year Low for Foreclosures

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Despite the fact that we keep hearing about a resurgence, a revival, in the housing market, more homes are entering into the foreclosure process.

It was revealed on Friday that homes receiving first-time foreclosure notices rose 7% in March from February, according to foreclosure listing company RealtyTrac.

If that number sounds bad, at least it is consistent. That is the third month in a row that the number has gone up, and it reflects the fact that bankers are stepping up action against homeowners failing to make their payments.

Daren Blomquist, vice president at RealtyTrac, told AP that, "We're not out of the woods yet with foreclosures. There are more batches of foreclosures coming through the pipeline."

The numbers are something of a setback, as it looked as if the realty market was on a bit of a rise. Foreclosure activity slowed down in the fall of 2010, although there were claims from some quarters that banks and mortgage servicers were processing foreclosures without verifying documents.

However, there will no such slips through the net now. Since February, when a $25 billion settlement was reached between the country's biggest mortgage lenders and state officials, the banks have tightened up on unpaid mortgages.

While foreclosed homes sell at a discount to other homes, they can also drag down the value of neighboring homes. Therefore, while the action of the banks is understandable, it could ultimately prove to be self-defeating, as the market will take longer to bounce back.

The housing market across the nation is still weak, despite the aforementioned cries of a revival, even after the best winter for home sales in five years, and some signs of improvement in the job market.

It is also worth mentioning that the vast majority of homes going into foreclosure are properties that have gone unpaid for a long time. We are not talking about a couple of months of unpaid bills between jobs.

"The faster we can move some of these old foreclosures through the pipeline, the faster the market can be in a place to recover," Blomquist said.

First-time foreclosure notices, including those warnings of initial default, are just the first step in a fairly long process ultimately leading to foreclosure. The homeowner can pay the overdue payment and exit the process.

Still, no mater how you look at it, March was a bad month for the housing numbers.

Follow me @BCallwood .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Economy

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