The overall foreclosure numbers for the country continue to steadily decrease, but a closer look at the RealtryTrac data shows that depending on the region, foreclosure activity might be on the way back up.
The U.S. Foreclosure Market Report for July 2012 shows foreclosure filings — default notices, scheduled auctions and bank repossessions — decreased 3 percent from the previous month and 10 percent from July 2011. But that broad number doesn’t show the whole picture, as Daren Blomquist, vice president of RealtyTrac, elaborated on the regional differences.
“U.S. foreclosure activity continued its uneven descent in July as the overall numbers declined on an annual basis for the 22ndstraight month, but properties starting the foreclosure process increased on an annual basis for the third straight month,” he said. “Recent foreclosure activity patterns vary significantly from state to state, often hinging on the level of dysfunction that exists in each state’s foreclosure process.
“In states like Florida, Illinois and New Jersey, where processing and procedural issues slowed foreclosure activity to a crawl last year, foreclosure numbers continue to rebound off those artificially low levels. But in states like Texas, Arizona and Virginia, where the average time to foreclose is well below the national average of 378 days, foreclosure activity continues on a long-term downward trend.”
He also noted that recent legislation and court rulings could lengthen the foreclosure process in some of the states with shorter timelines, which could result in a temporary foreclosure lull and subsequent rebound in those states as well.
“Case in point is a new Oregon law that took effect in July and gives homeowners in default or at risk of default the right to request mediation to avoid foreclosure,” Blomquist said. “Oregon foreclosure activity dropped 42 percent from June to July, hitting a five-year low, but we would expect the Oregon numbers to trend back higher sometime in the next several months based on the pattern we’ve seen in other states with similar legislation.”
Here are some other high-level findings from the report:
- Overall foreclosure activity dropped to its lowest level since April.
- The decline in overall foreclosure activity was driven primarily by a 21 percent year-over-year decrease in bank repossessions, or REOs.
- Thirty-eight states and the District of Columbia posted annual decreases in REO activity, but there were some notable exceptions where REO activity increased annually, including Florida (38 percent), Ohio (25 percent), Illinois (22 percent), and New Jersey (21 percent) — all judicial foreclosure states where foreclosures are processed through the court system.
- U.S. foreclosure starts in July increased 6 percent on a year-over-year basis, the third straight month with an annual increase in foreclosure starts following 27 consecutive months of decreasing foreclosure starts on an annual basis.
- Foreclosure starts increased on a year-over-year basis in 27 states, led by Connecticut (201 percent), New Jersey (164 percent), Pennsylvania (139 percent), Indiana (83 percent), and Massachusetts (65 percent) — all judicial foreclosure states.