RealtyTrac reported that foreclosure filings inched up 2 percent in May from April, but is still down 28 percent year over year. The monthly increase in overall foreclosure activity was caused largely by an 11 percent month-over-month increase in bank repossessions (REOs), although REO activity was still down 29 percent from a year ago.
The company’s U.S. Foreclosure Market Report for May 2013 showed that foreclosure filings were reported on 148,054 U.S. properties in May — one in every 885 U.S. housing units had a foreclosure filing during the month.
“Foreclosure activity continued to bounce back in some markets where it may have appeared the foreclosure problem had been knocked out by an aggressive combination of foreclosure prevention efforts over the past two years,” said Daren Blomquist, vice president at RealtyTrac. “Places like Nevada, where foreclosure starts increased to a 20-month high, and Maryland, where overall foreclosure activity increased to a 33-month high. Still, the emerging housing recovery has strengthened most local markets enough to quickly shake off a few more blows from these nagging foreclosures.”
REO activity increased from the previous month in 33 states — including North Carolina (60 percent), Oregon (57 percent), Wisconsin (44 percent), Illinois (44 percent), Colorado (23 percent), and Michigan (19 percent). REO activity increased 9 percent from the previous month in non-judicial states and was up 13 percent from the previous month in judicial states.
Among the five lenders involved in last year’s national mortgage settlement, all but one (Citi) posted monthly increases in REO activity, indicating that temporary stoppages of foreclosure sales announced during the month by some of the lenders involved in the settlement had little lasting impact on the number of completed foreclosures for the month.
U.S. foreclosure starts increased 4 percent from the previous month but were still down 33 percent from a year ago. Foreclosure starts increased from the previous month in 26 states and were up from a year ago in 14 states, including Maryland ( 229 percent), Connecticut (122 percent), Hawaii (108 percent), Arkansas (84 percent), New Jersey (82 percent), Nevada (81 percent), Washington (53 percent), Pennsylvania (26 percent) and New York (13 percent).
The foreclosure problem continued to shift away from non-judicial states and toward judicial states. Judicial states accounted for five of the top six foreclosure rates nationwide: Florida, Ohio, Maryland, South Carolina and Illinois. At No. 2, Nevada’s foreclosure rate was the highest ranked among non-judicial states.
Among the nation’s 20 largest metros, those with the biggest increases in median home prices tended to be in states where a non-judicial foreclosure process has allowed foreclosures to be absorbed by the market more quickly. Seven of the 10 metros with the biggest jumps in median home prices from a year ago were in non-judicial states, while all five metros with flat or declining median prices were in states with a judicial foreclosure process.
“While foreclosure activity is less than one-third the level it was at the height of the foreclosure crisis in Reno, the 20-month high in foreclosure starts in May could provide some limited relief to the shortage of inventory as those foreclosure starts translate into short sales, sales at the public foreclosure auction or possibly bank-owned sales over the next year,” said Craig King, chief operating officer at Chase International brokerage, which covers the Reno and Lake Tahoe markets. “Given the shortage of inventory and rising home prices, banks have little motivation to hold back on any foreclosures, so homeowners who have not been making payments for several months or even years without a foreclosure notice should expect to see that notice coming and would be well-advised to list their home as a short sale if they have no other alternative to avoid foreclosure.”