Foreclosure activity fell to a five-year low in September, but a substantial divide in filings remains between judicial and nonjudicial states, according to a new reading on the market from RealtyTrac.
Default notices, scheduled auctions and bank repossessions were reported on 180,427 properties in September, a 7% decrease from August and 16% decline from a year ago. The fall in September foreclosure filings resulted in the lowest quarterly numbers since 4Q 2007.
In the third quarter, foreclosure filings were reported on 531,576 homes, a decrease of 5% from 2Q and down 13% from last year. One in every 248 housing units had a foreclosure filing, the Irvine, Calif.-based analytics provider said.
“We’ve been waiting for the other foreclosure shoe to drop since late 2010, when questionable foreclosure practices slowed activity to a crawl in many areas, but that other shoe is instead being carefully lowered to the floor and therefore making little noise in the housing market,” said Daren Blomquist, vice president at RealtyTrac. “Make no mistake, however, the other shoe is dropping quite loudly in certain states, primarily those where foreclosure activity was held back the most last year.”
The national decrease in activity was driven mostly by sizable decreases in nonjudicial foreclosure states such as Nevada (down 71%), Oregon (63%), California (29%), Georgia (20%), Texas (17%), Arizona (23%) and Michigan (28%).
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Meanwhile, several judicial states bucked the national trend, showing an uptick in foreclosures. Florida, Illinois, Ohio, New York and New Jersey registered substantial year-over-year increases in September and third quarter foreclosure activity.
“Several states where the foreclosure flow was not so dammed up last year could see a roller-coaster pattern in foreclosure activity going forward because of recent legislation or court rulings that substantively change the rules to properly foreclose,” Blomquist added. “A backlog of delayed foreclosures will likely build up in those states as lenders adjust to the new rules, with many of those delayed foreclosures eventually hitting down the road.”
For the first time since April 2005, Florida had the highest foreclosure rate in the nation with one in every 117 housing units having a filing attached to it. Arizona, California, Illinois and Georgia rounded out the top five in this "bad news" category.
U.S. properties foreclosed upon in the third quarter took 382 days to complete the process, which is the greatest amount of time since 1Q 2007.
