Foreclosure Starts Plummet, A Procedural Change Behind It?
A significant drop in foreclosure starts can be attributed to procedural changes that recently went into effect from the national robo-signing settlement, Lender Processing Services said in its October mortgage monitor report.
Beginning in September, mortgage servicers are required to provide borrowers with written notice 14 days before referring a delinquent loan to a foreclosure attorney.
Servicers initiated 124,292 foreclosure actions in October, a 22% plunge form September. Compared to the same month a year earlier, foreclosure starts declined by a whopping 48%.
Foreclosure inventory fell sequentially by almost 7%. Still, LPS believes the phenomena could be short lived as servicers adjust to the new regulations.
“These regulations resulted in what is likely a temporary slowdown in foreclosure starts that we do not believe is indicative of a longer-term trend,” said Herb Blecher, senior vice president of applied analytics at Lender Processing Services.
“However, we will continue to monitor this activity closely in the coming months,” he added.
Meanwhile, home prices rose 3.6% year-over-year nationally and are on track for a 5% to 7% gain by the end of 2012, LPS estimates. Still, prices are off almost 23% from the peaks achieved in June 2006.