IRVINE, CA—Certain foreclosure actions were up 7% in the month of July, according to a report released today by RealtyTrac.
A total of 124,910 US properties were subjects of default notices, scheduled auctions and bank repossessions for the month. That is also up 14% from a year ago, according the July 2015 U.S. Foreclosure Market Report from RealtyTrac. July was the fifth consecutive month with a year-over-year increase in overall foreclosure activity following 53 consecutive months of decreases.
“The increase in overall foreclosure activity over the last five months has been driven primarily by rapidly rising bank repossessions, which in July reached the highest level since January 2013,” said Daren Blomquist, vice president at RealtyTrac. “Meanwhile foreclosure starts in July were at the lowest level since November 2005 — a nearly 10-year low that demonstrates the recent rise in bank repossessions represents banks flushing out old distress rather than new distress being pushed into the pipeline.”
“This clearing of old distress is evident in the fact that properties foreclosed in the second quarter had been in the foreclosure process an average of 629 days, the longest in any quarter since we began tracking in the first quarter of 2007,” Blomquist continued. “It's also evident that the recent surge in REOs is in fact clearing out more of the bad bubble-era loans from the so-called shadow inventory. RealtyTrac data now shows 61% of loans still in the foreclosure process were originated during the housing bubble years of 2004 to 2008, down from 68% last year and 75% two years ago.”
Repos at 30-month High
There were a total of 46,957 properties repossessed by lenders (REO) in July, up 29% from previous month and up 81% from a year ago to highest level since January 2013. Despite the recent increases, REOs in July were still less than half their peak of 102,134 in September 2010, but more than twice their pre-crisis average of 23,119 a month in 2005 and 2006.
REOs increased from a year ago in 44 states in July, including Florida (up 78%), California (up 23%), Texas (up 187%), Georgia (up 87%), Michigan (up 129%), Ohio (up 69%), and New Jersey (up 344%).
“The remnants of our South Florida distressed market are seen in the strong REO numbers — double what they were last year,” said Mike Pappas, CEO and president of the Keyes Company covering the South Florida market. “The short sales have basically been eliminated and our long judicial system is finally clearing out the last vestiges of these REO properties.”
Foreclosure Starts Below Pre-crisis Levels
There were a total of 45,381 U.S. properties that started the foreclosure process for the first time in July, down 8% from the previous month and down 9 percent from a year ago to the lowest level since November 2005 — a nearly 10-year low. Foreclosure starts in July were less than one-fourth of their peak of 203,948 in April 2009 and below their pre-crisis average of 52,279 a month in 2005 and 2006.
Foreclosure starts decreased from a year ago in 31 states in July, including California (down 25%), New York (down 19%), Texas (down 40%), Illinois (down 18%), Georgia (down 24%), Ohio (down 22%), Michigan (down 37%), and Maryland (down 15%).
“Many of the Ohio markets have been fortunate with continued growth in sales volumes, increased employment numbers, and moderately increasing prices that are contributing factors to an overall reduction in foreclosure numbers across Ohio,” said Michael Mahon, president at HER Realtors, covering the Cincinnati, Dayton and Columbus markets in Ohio. “As days on market have remained fairly low across the state, we are seeing many lending servicers acting quickly to establish communications with delinquent homeowners, and assist them in avoiding the foreclosure process.”
States with increasing foreclosure starts — bucking the national trend — included Massachusetts (up 130%), New Jersey (up 76%), Missouri (up 72%), Wisconsin (up 27%), and Florida (up 16%).
Report methodology
The RealtyTrac U.S. Foreclosure Market Report provides a count of the total number of properties with at least one foreclosure filing entered into the RealtyTrac database during the month — broken out by type of filing. Some foreclosure filings entered into the database during the month may have been recorded in previous months. Data is collected from more than 2,200 counties nationwide, and those counties account for more than 90% of the U.S. population. RealtyTrac's report incorporates documents filed in all three phases of foreclosure: Default — Notice of Default (NOD) and Lis Pendens (LIS); Auction — Notice of Trustee's Sale and Notice of Foreclosure Sale (NTS and NFS); and Real Estate Owned, or REO properties (that have been foreclosed on and repurchased by a bank). The report does not count a property again if it receives the same type of foreclosure filing multiple times within the estimated foreclosure timeframe for the state where the property is located.
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David Phillips
David Phillips is a Chicago-based freelance writer and consultant with more than 20 years experience in business and community news. He also has extensive reporting experience in the food manufacturing industry for national trade publications.
