Midyear foreclosure numbers are on pace to exceed 3 million properties by the end of the 2010, and more than 1 million REOs.
These are the latest findings from the Irvine, Calif.-based tracking service RealtyTrac, which says a total of 1.96 million foreclosure filings were reported on 1.65 million U.S. properties in the first six months of 2010.
This was a 5% decrease in total properties from the previous six months but an 8% increase from the first half of 2009.
"The roller coaster pattern of foreclosure activity over the past 12 months demonstrates that while the foreclosure problem is being managed on the surface, a massive number of distressed properties and underwater loans continues to sit just below the surface, threatening the fragile stability of the housing market," said CEO James Saccacio.
Default and auction notices were down on a month-over-month and year-over-year basis in the first quarter, but REOs increased 5% from the prior quarter and 38% from the Q2 2009 to 269,962, a new quarterly high for the report.
The second quarter of the year demonstrated "a tale of two trends," described Saccacio.
"The pace of properties entering foreclosure slowed as lenders pre-empted or delayed foreclosure proceedings on delinquent properties with more aggressive short sale and loan modification initiatives," he said.
"Meanwhile the pace of properties completing the foreclosure process through bank repossession quickened as lenders cleared out a backlog of distressed inventory delayed by foreclosure prevention efforts in 2009."
Foreclosure filings were reported on 895,521 properties during the 2Q, a decrease of nearly 4% from the previous quarter and an increase of less than 1% from the second quarter of 2009.
Filings occurred on 313,841 U.S. properties in June, down 3 % from May, down 7% from June 2009. June was the sixteenth straight month where the total number of properties with foreclosure filings exceeded 300,000.
Ronald Jasgur, president of OfferSubmission.com, a tool for managing the REO sales process, says the advent of laws like HAFA, which was designed to keep REOs off the market, has not helped the length of time it takes to complete short sales.
"The agents are getting 'no's' a lot faster," said Jasgur.
"A good chunk of these properties that are in some type of trial modification will become an REO and there's really not a way to prevent it."
This will further prolong the housing recovery, he says.
"Buyers are worried if they are getting in at the bottom. Are prices going to go down another 5% or 10%? We know it will be slow appreciation back up."
Until the industry works through this inventory, he says there is going to be the concern that "the current process isn't going to allow the floor to be seen quickly."
Not surprisingly, RealtyTrac reported that Nevada, Arizona and Florida posted the top foreclosure rates. Nearly 6% of all Nevada housing units (one in 17) received at least one foreclosure filing in the first half of 2010
A total of 64,429 Nevada properties received a filing from January to June, down 13% from the previous six months and a decrease of 6% from the first six months of 2009.
In Arizona, 3.36% of its housing units (one in 30) received a filing during the first quarter and Florida, 3.15% (one in 32).
Other states with foreclosure rates ranking among the nation's 10 highest were California (2.54%), Utah (1.91%), Georgia (1.79%), Michigan (1.73%), Idaho (1.68%), Illinois (1.61%), and Colorado (1.40%).
In California a total of 340,740 properties received a foreclosure filing in the first half of the year, the nation's highest total but this was down 15% from the previous six months and down 13% from a year ago.
With 277,073 properties receiving a foreclosure filing, Florida documented the second highest state total. First-half foreclosure activity in Florida decreased nearly 9% from the previous six months but increased 3% from the first half of 2009.
Arizona's 91,484 properties receiving a foreclosure filing was the third highest state total even though the state's foreclosure activity decreased 2% from the previous six months. Arizona foreclosure activity in the first half of 2010 was still up slightly at 2% percent more compared to the first half of 2009.
Other states with first-half totals among the 10 highest in the country were Illinois (85,223), Michigan (78,509), Georgia (71,949), Texas (64,883), Nevada (64,429), Ohio (59,927), and New Jersey (36,542).
