Foreclosure Starts Fall to Lowest Level Since December 2005
A decrease in foreclosure starts was the main driver that led to a fall in overall activity with 128,560 foreclosure filings reported during August, according to data from RealtyTrac.
The number of default notices, scheduled auctions and bank repossessions throughout the country fell 2% from the previous month and 34% from last August, marking the 35th consecutive month that foreclosure activity decreased on an annual basis.
Overall, one in every 1,019 U.S. housing units had a foreclosure filing during the month.
“The foreclosure floodwaters have receded in most parts of the country, but lenders and communities continue to clean up the damage left behind, which means the recent uptick in bank repossessions is a trend that will likely continue into next year,” said Daren Blomquist, vice president at RealtyTrac.
A total of 55,775 housing units started the foreclosure process in August, down 44% from last year, which is the lowest level since December 2005.
The Irvine, Calif.-based firm said 38 states posted less foreclosure starts in August than the prior year. But on a monthly basis, 17 states initiated more foreclosures, including Nevada (up 226%), Kentucky (130%), Ohio (44%), North Carolina (41%), Maryland (24%), California (12%) and New York (8%).
“Foreclosure flash floods will continue to hit some markets over the next few months as delayed foreclosure starts are quickly pushed into the pipeline,” Blomquist added. “This was the case with the jump in Nevada foreclosure starts in August.”
Meanwhile, as home prices continue to increase nationwide, more lenders are taking action on delinquent mortgages. RealtyTrac said bank repossessions in August reached a five-month high and increased 6% from the previous month. However, REO activity is still down 25% year-over-year.
Lenders repossessed more housing units on a monthly and yearly basis in 26 and 23 states, respectively. Notable states that saw a year-over-year uptick in REO activity include New York up 123%, New Jersey had a 63% increase, Florida with a 48% rise, and Connecticut and Ohio were both up 46%.
“Due to lack of inventory during the summer months, there is a current demand amongst buyers who are ready, willing and able to purchase new inventory being introduced to the market,” said Michael Mahon, executive vice president and broker at HER Realtors.
A 104% monthly spike in foreclosure activity helped Nevada reclaim the nation’s highest foreclosure rate where one in every 359 housing units filed for foreclosure. This is more than two and a half times the national average.
The top five states behind Nevada on this list, RealtyTrac revealed, were Florida, Ohio, Maryland and Delaware.
“The increase in defaults is most likely tied to the implementation of two new laws in Nevada—SB 300, which took effect June 1, and the Nevada Homeowner Bill of Rights, which will take effect on Oct. 1,” said Craig King, chief operating officer of Chase International. “Banks are in the process of interpreting the new laws and making necessary changes in their documentation, and have said it will take some months to sort through the changes. During this process there will probably be significant volatility in foreclosure-related activities.”