It appears the nation’s foreclosure crisis has turned the corner—thanks to short sales.
According to new figures compiled by RealtyTrac, servicers filed 188,780 notices of default in April, the lowest reading since July 2007. The NODs—which include default notices, scheduled auctions and bank repossessions—fell 5% from March and are down 14% from a year ago.
One in every 698 housing units had a foreclosure filing last month, the Irvine, Calif.-based analytic provider said.
“More distressed loans are being diverted into short sales rather than becoming completed foreclosures,” said Brandon Moore, CEO of RealtyTrac. “Our preliminary first quarter sales data shows that pre-foreclosure sales—typically short sales—are on pace to outnumber sales of bank-owned properties during the quarter in California, Arizona and 10 other states.”
After three consecutive monthly increases, foreclosure starts were down in April compared to March. A total of 97,665 properties began the foreclosure process during April, down 4% from March and 2% lower from the same time period last year.
Bank repossessions continued to decline on a monthly basis too, as lenders completed the foreclosure process on 51,415 homes. This is a 26% drop from April 2011 and represents the 18th straight month of year-over-year decreases in REO activity.
REO activity decreased on an annual basis in 37 states and Washington, D.C., while 28 states posted monthly drops in foreclosure activity. States that experienced the largest year-over-year decreases in REO activity included Nevada (71%), Arizona (70%), Washington (67%), California (52%), Virginia (47%) and Maryland (47%).
However, annual increases in foreclosure activity occurred in 11 of the 20 largest metropolitan markets, led by the Florida cities of Tampa and Miami which had gains of 59% and 38%, respectively.
Other cities that saw more foreclosure filings were St. Louis, Chicago, Philadelphia and Atlanta. But many cities on the West coast experienced a slowdown in foreclosure activity over the last year, including Seattle (down 54%), Phoenix (44%), San Francisco (34%), Riverside-San Bernardino (30%) and Los Angeles (28%).
Nevada posted the nation’s highest foreclosure rate in April with one in every 300 housing units with a foreclosure filing. Despite foreclosure activity decreasing 30% from last year, California had the second highest foreclosure rate in which one in every 351 properties had a foreclosure filing. Florida had the nation’s third highest foreclosure rate with one in every 364 housing units filing for foreclosure.
“Rising foreclosure activity in many state and local markets in April was masked at the national level by sizable decreases in hard-hit foreclosure states like California, Arizona and Nevada,” Moore said. “Those three states, and several other nonjudicial foreclosure states like them, more efficiently processed foreclosures last year, resulting in fewer catch-up foreclosures this year.”