Since the national mortgage servicing settlement was finalized almost a year ago, lenders have been reviving the backlog of delinquent loans into foreclosure over the last 12 months.
In its first-ever U.S. foreclosure inventory analysis, RealtyTrac said nearly 1.5 million properties were actively in the foreclosure process or bank-owned in the first quarter of 2013. This is up 9% from last year, but still down 32% from the peak of 2.2 million in December 2010.
“Delinquent loans that fell into a deep sleep after the robo-signing controversy in late 2010 are gradually coming out of hibernation following the finalization of the national mortgage settlement in April 2012. The settlement provided some closure regarding accepted foreclosure processing practices,” said Daren Blomquist, vice president at RealtyTrac.
The annual increase in foreclosure inventory was mainly driven by a 59% jump in preforeclosure inventory—properties that have had an initial default notice but have not yet completed the foreclosure process. Meanwhile, inventory of homes scheduled for foreclosure auction decreased 25% and REO inventory fell by 3%.
RealtyTrac said the estimated market value of homes in foreclosure or bank-owned was $200 billion through 1Q 13, up 14% from the $175 billion value a year ago.
The Irvine, Calif.-based analytic firm revealed that 26 states posted annual increases in foreclosure inventory, while 24 states, as well as Washington, D.C., experienced a drop in foreclosure activity. Not surprisingly, the inventory behavior correlated to the type of foreclosure process utilized in each state: judicial or nonjudicial.
Among those who saw higher foreclosure inventory in the first quarter of 2013 compared to last year, 19 states use the judicial process, which RealtyTrac said has been more susceptible to backlogs of
New York had a 125% uptick in total foreclosure inventory, posting the largest increase throughout the country on an annual basis. Other states that experienced dramatic surges in foreclosure inventory over this time period included Florida (up 80%), New Jersey (45%), Illinois (38%) and Ohio (22%).
On the other hand, the top five states that had the biggest drop in overall foreclosure inventory from the 1Q 2012 to this year were California, Georgia, Michigan, Arizona and Texas.
Government-backed entities Fannie Mae, Freddie Mac and FHA/HUD accounted for the biggest portion of foreclosure inventory, with a combined 12% of the national total. Other servicers that held the most volume of foreclosed inventory was Bank of America with 11%, Wells Fargo had 10% and JPMorgan Chase with 7%.
According to RealtyTrac, more than 60% of foreclosure inventory in 1Q 13 was comprised of properties with loan amounts under $200,000. Meanwhile, homes with outstanding loans between $200,000 to $400,000 represented an additional 30% of the foreclosure inventory.
