Annual Foreclosure Rate Declines for 20th Straight Month; Nevada Gives Up Top Spot

Foreclosure
filings
topped 200,000 during May for the first time in two months but filings
were still below the rate a year earlier according to the U.S. Foreclosure
Market Report released by RealtyTrac this morning.  A total of 205,990 properties or one in every
639 housing units received some type of foreclosure filing during the month
compared to 188,780
in April, an increase of 9 percent.  Despite
the increase, filings were down 4 percent from May 2011 marking the 20th
straight month that year-over-year figures fell.  Judicial
states posted a 26 percent annual increase in overall foreclosure activity
while non-judicial states were down 20 percent.

RealtyTrac is an Irvine, California firm
that tracks three categories of foreclosure filings gathered from county level
sources. 

    “U.S. foreclosure activity has now
    decreased on a year-over-basis for 20 straight months including May, but the
    jump in May foreclosure starts shows that it’s going to be a bumpy ride down to
    the bottom of this foreclosure cycle,” said Brandon Moore, CEO of RealtyTrac.
    “Based on the rise in pre-foreclosure sales we’ve seen so far this year, a
    higher percentage of these new foreclosure starts will likely end up as short
    sales or auction sales to third parties rather than bank repossessions going
    forward. While pre-foreclosure sales have less of a negative impact on home
    values than bank-owned sales, they still represent a discounted sale where a
    distressed homeowner is losing his or her home.

    For the first time in years Nevada
    no longer topped the nation in foreclosure activity
    , falling to third place
    with 3,755 filings, a 4 percent decrease since April and 66 percent less than a
    year earlier.  One in every 313 housing
    units in Nevada received a filing. 
    Georgia leapt into first place with a 33 percent increase in activity in
    one month and was up 30 percent from May 2011. 
    One in every 300 Georgia housing units was affected by foreclosure
    during the month.  

    Arizona’s foreclosure activity rose
    24 percent in May, putting it in second place among the states despite the fact
    its rate, one in every 305 housing units, was down 29 percent from a year
    earlier. 

    Foreclosure starts were filed on
    109,051 U.S. properties in May, a 12 percent increase from April and a 16
    percent increase from May 2011. This was the first time in 27 months that
    foreclosure starts increased on an annual basis. Starts were up year-over-year in
    33 out of 50 states with the largest annual increases in Tennessee (165
    percent) New Jersey (118 percent), Pennsylvania (97 percent), and Florida (83
    percent).  Massachusetts, Texas, and New
    York also saw starts rise by more than 50 percent.

    After three straight monthly
    decreases to a 49-month low in April, bank repossessions (REOs) increased in
    May, rising 7 percent. Lenders completed the foreclosure process on 54,844 U.S.
    properties during the month.  This was
    still a decrease of 18 percent compared to May 2011.

    RealtyTrac attributes some of this
    decrease
    to a widening acceptance among lenders of the value of pre-foreclosure
    sales
    , usually short sales where the bank accepts less than the amount it is
    owned to allow the sale of a home to a third party.  Moore said, “More banks are now recognizing
    that treating the problem of delinquent mortgages with short sales rather than
    bank repossessions can help them minimize their losses and also avoid taking on
    more REOs, which they then have to manage, maintain and market for sale.”

    “Disposing of distressed homes by
    pre-foreclosure sale can also benefit lenders and servicers because
    pre-foreclosure homes sell at a higher average price point than bank-owned
    homes,” he continued. “Our first quarter foreclosure sales report showed that
    the average price of a pre-foreclosure home was more than $27,000 higher than
    the average price of a bank-owned home – which quickly adds up given that there
    have been an average of 1.6 million nationwide foreclosure starts per year for
    the past five years.

    REO activity increased on an annual
    basis in 17 states in May, including North Carolina (66 percent), Illinois (65
    percent), and Massachusetts (59 percent). 
    There were large decreases in Nevada (68 percent), Arizona (43 percent),
    Michigan (42 percent), and Colorado (42 percent).

     Riverside California, Atlanta,
    and Phoenix had the highest foreclosure rates among the 20 largest metropolitan
    areas in the country followed by Chicago and the Tampa-St. Petersburg area in
    Florida.

    …(read more)

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