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Descent of Backlog, Completed Foreclosure Inventory Continues

FEB 28, 2013 12:25pm ET
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Despite regional issues, year-over-year the nation’s foreclosure inventory has fallen for 15 consecutive months to less than 3% of all mortgages, according to the January CoreLogic National Foreclosure Report.

By January 2013 the number of completed foreclosures and the overall foreclosure inventory dropped from 75,000 in January 2012 to 61,000, decreasing 17.8% year-over-year.

Month-over-month, however, completed foreclosures increased by 10.5% from 56,000 in December 2012 to 61,000 in January 2013.

Mark Fleming, chief economist for CoreLogic, finds improvements in the backlog of distressed assets are significant because “the foreclosure inventory has fallen to a level not seen since mid-2009.”

CoreLogic uses as a basis of comparison data prior to the decline in the housing market in 2007. Completed foreclosures—an indication of the total number of homes actually lost to foreclosure—averaged 21,000 per month between 2000 and 2006.

Since the financial crisis began in September 2008, approximately 4.2 million homes were lost to foreclosure.

Data show as of January 2013 1.2 million homes were in some stage of foreclosure in the U.S., or part of the foreclosure inventory, down 21% from 1.5 million in January 2012, marking the 15th consecutive month with a year-over-year decline. In January 2013 the foreclosure inventory represented 2.9% of all homes with a mortgage compared to 3.5% in January 2012.

Even month-over-month, the foreclosure inventory decreased to 3.3% from December 2012 to January 2013.

Improvements are widespread, Fleming said. “Only six states and 13 of the largest 100 metro areas had an increase in the foreclosure rate year over year.”

Nonetheless, certain patterns persist. As of January the top five states with the highest number of completed foreclosures year-over-year were California (96,000), Florida (95,000), Michigan (74,000), Texas (59,000) and Georgia (50,000) which account for almost half of all completed foreclosures nationally.

CoreLogic executives expect the trend will continue in 2013 as the housing market stabilizes and purchase activity picks up. Anand Nallathambi, president and CEO of CoreLogic, warned, however, that over a million homes still are in some stage of foreclosure “which is too high,” even though the lower number of completed foreclosures is “a light at the end of the tunnel.”

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