Foreclosures Down Following Increased Loss Mit Efforts

Foreclosure activity across the nation decreased at least 10% in January as a result of extensive foreclosure forbearance efforts on the part of lenders and government agencies, according to the latest reports from two companies that track foreclosure data. Legislative Action In its January 2009 U.S. Foreclosure Report, RealtyTrac said foreclosure filings, including default notices, auction sale notices and bank repossessions, were reported on 274,399 properties during the month, a 10% decrease from December but still up 18% from January 2008. James Saccacio, chief executive officer of RealtyTrac, pointed out that the Fannie Mae and Freddie Mac moratorium on all foreclosure sales that was extended through the end of January made an impact along with Florida’s voluntary 45-day freeze on all new foreclosure actions and scheduling of foreclosure sales that began in December.

“January REOs, which represent completed foreclosure sales to the foreclosing lender, were down 15% nationwide from December. And in Florida overall foreclosure activity was down 20%.”

Bank CEOs are pledging to forbear on foreclosures, which will help extend the trend of fewer foreclosures going forward. According to the Financial Times, U.S. banking chiefs last Wednesday yielded to demands by angry members of Congress and agreed to suspend mortgage foreclosures for at least three weeks to give the government time to finalize its financial rescue plans, which may include a national forbearance. The move will freeze repossessions on one million U.S. homes.

RealtyTrac’s report incorporates documents filed in all three phases of foreclosure, including default, auction and real estate-owned. If more than one foreclosure document is filed against a property during the month or quarter, only the most recent filing is counted in the report.

In its January report, foreclosure filings were reported on 76,761 California properties, the most of any state despite a 14% decrease from December. The state’s foreclosure activity in January still increased 34% from January 2008.

Florida’s 40,770 properties receiving foreclosure filings in January was the second highest total of any state, and Arizona’s 14,674 properties receiving filings was the third highest total. Illinois foreclosure activity increased 16% from December, giving the state 14,447 properties with foreclosure filings. California cities accounted for six of the top 10 metro foreclosure rates in January among metro areas with a population of 200,000 or more.Merced, Calif., posted the top metro foreclosure rate, with one in every 59 housing units receiving a filing during January — nearly eight times the national average. Sacramento, Calif.-based Foreclosures.com said foreclosures across the U.S. plummeted by more than 25% in January, with many of the hardest-hit states seeing dramatic drops in the number of homes repossessed by lenders, according to its U.S. Foreclosure Index.

Nationally, the number of completed foreclosures dropped from 97,841 in December to 72,694 in January, reported Foreclosures.com, which bases its analysis on the number of formal notices filed against a property during the foreclosure process. That can include notice of default, notice of foreclosure auction and/or notice of REO. Pre-foreclosure filings are initial notices that all do not end up as foreclosure.

The company said pre-foreclosure filings dropped 12% from 190,467 in December to 166,860 in January. Foreclosures in California dropped more than 31% in January to 14,351, less than half the 31,851 properties foreclosed in the peak month of September 2008.

In Florida, there were 10,007 foreclosures completed in January, down from 12,786 in December. Nevada fell from 4,039 in December to 3,207 in January. Arizona, Texas, Georgia and Ohio also experienced declines in completed filings. Among states with the most pre-foreclosure filings, only Texas and Michigan saw increases.

Alexis McGee, president of Foreclosures.com, said the nation’s foreclosure crisis largely began in California, and the comeback is spreading from there as well.

Ms. McGee said efforts made last year by government and industry to lay the groundwork for housing recovery finally are yielding the hoped-for slowdown in the foreclosure hemorrhage. “It’s not quite time to pop that celebratory champagne. But Fannie Mae and Freddie Mac’s moratorium on foreclosures before the holidays, big lenders emphasizing loan workouts, and states taking steps to slow down foreclosures are all working together to make a difference. And the significant drops have occurred despite the higher 7.6% unemployment rate.”

With the amount of both state and federal government foreclosure intervention programs and mortgage lenders who are finally starting to be more accommodating on their loan modifications to avoid foreclosure, Ms. McGee said she expects the growth of 2009 foreclosures to be much less than many experts are predicting.

“Investors and first-time homebuyers are coming off the sidelines and buying homes,” she said. “These market changes and efforts by some lenders to modify loans are changing the dynamic of the real estate market.”

While unemployment definitely is a concern to the economy overall, it appears it’s outweighed by favorable conditions bringing buyers into the housing markets, said Ms. McGee. “The dramatic drop in home prices and historically low mortgage interest rates are making homes more affordable – and accessible – than we’ve seen in almost 30 years.”

She said investors and first-time homebuyers are coming off the sidelines and buying homes. “These market changes and efforts by some lenders to modify loans are changing the dynamic of the real estate market.”