Foreclosure Filings Start to Rise Moderately


After three straight quarters in which foreclosure activity throughout the country was down due to the robo-signing scandal, a new trend began in the third quarter that analysts predict may last for an extended period of time.

According to RealtyTrac’s foreclosure market report, there were 610,337 foreclosure filings—default notices, scheduled auctions and bank repossessions—reported in the third quarter, an increase of less than 1% from the second quarter. However, foreclosure filings of this type are still down year-over-year by roughly one-third.

The report shows one in every 213 U.S. housing units had a foreclosure filing during the quarter.

The increase from the previous quarter was marginal but it still could be an indicator the temporary downward trend is about to slowly change direction and ramp back up, said James Saccacio, CEO of RealtyTrac, in the report.

Saccacio said the marginal increase in foreclosure activity was caused by a 14% jump in new default notices, indicating that lenders are “cautiously throwing more wood into the foreclosure fireplace after spending months trying to clear the chimney of sloppily filed foreclosures.”

Default notices were filed on 195,878 U.S. properties in the third quarter. Some of the states with the biggest quarterly increases in default notices included Massachusetts up 65%, New Jersey with a 29% increase, Florida was 24% higher, there was a 21% jump for Ohio and California had a 21% increase.

Former RealtyTrac executive Rick Sharga, now executive vice president at Carrington Mortgage Holdings, said the quarterly increase has been driven by two factors. The first is the August spike when New Jersey courts allowed foreclosure proceedings to start again for the top six lenders-servicers nationwide. The second reason Sharga cited for the quarterly uptick is when Bank of America increased its initiated foreclosure proceedings.

“Despite that one-month jump, foreclosure starts are still off by 31% from the same quarter a year ago,” Sharga said. “While there are signs that the logjam might be breaking up a little bit in some of the states that process judicial foreclosures (like Florida), overall activity continues to be lower than one might anticipate.”

The Irvine, Calif.-based data firm also reported that foreclosure processing and sales timelines hit record highs in the third quarter. Properties that were foreclosed upon took an average of 336 days to complete the default foreclosure process, an increase of 18 days from the previous quarter and the highest number of days since the first quarter of 2007.

New York properties took about 986 days to finish the foreclosure process, the longest in the nation and a record high for the state. New Jersey was the second slowest state completing the process in 974 days, followed by Florida at 749 days.

Texas registered the shortest average foreclosure process of any state at 86 days, with Kentucky next at 94 days and then Virginia at 102 days.

There were 214,855 properties issued a foreclosure filing in September, a 6% decrease from August and 38% lower from September 2010. September marked the 12th straight month where foreclosure activity decreased on a year-over-year basis.

“U.S. foreclosure activity has been mired down since October of last year, when the robo-signing controversy sparked a flurry of investigations into lender foreclosure procedures and paperwork,” Saccacio said.

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