Foreclosures Down, but Processing Delays a Factor

Foreclosure activity has hit a three-and-a-half year low, with one in every 605 U.S. homes receiving a foreclosure filing in May.

According to RealtyTrac Inc.'s monthly foreclosure report, foreclosure filings, which include default notices, scheduled auctions and bank repossessions, were reported on 214,927 properties, a 2% decrease from April and a 33% drop from May 2010. It was the lowest level of foreclosure activity since November 2007.

But the decline shouldn't be cause for celebration just yet.

"Foreclosure processing delays continue to mask the true face of the foreclosure situation," said RealtyTrac's chief executive, James J. Saccacio. “Activity spiked in May for various stages of the foreclosure process in some states, a pattern that has occurred in several states over the past few months. This pattern provides evidence that lenders are somewhat unevenly pushing batches of bad loans through foreclosure as they overhaul their paperwork and documentation procedures and as they determine that some local markets are able to absorb more foreclosure inventory."

Nevada posted the highest foreclosure rate for the 53rd straight month, with one in every 103 housing units receiving a foreclosure filing.

Just five states — Nevada, Arizona, California, Michigan and Florida — account for more than half of all U.S. foreclosure activity.