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Foreclosure Filings Dropped 26% In 2013

Foreclosure filings were reported on 1,361,795 U.S. properties in 2013, down 26% from 2012 and down 53% from the peak of 2.9 million properties with foreclosure filings in 2010, according to RealtyTrac’s Year-End 2013 U.S. Foreclosure Market Report.

The 1.4 million total properties with foreclosure filings in 2013 - including default notices, scheduled auctions and bank repossessions - was the lowest annual total since 2007, when there were 1.3 million properties with foreclosure filings.

The report also shows that 1.04% of U.S. housing units (one in every 96) had at least one foreclosure filing during the year, down from 1.39% of housing units in 2012 and down from a peak of 2.23% of housing units in 2010.

States with the highest foreclosure rates in 2013 were Florida (3.01% of all housing units with a foreclosure filing), Nevada (2.16%), Illinois (1.89%), Maryland (1.57%) and Ohio (1.53%).

States that saw the biggest increases in foreclosure activity in 2013 compared to 2012 included Maryland (up 117%), New Jersey (up 44%), New York (up 34%), Connecticut (up 20%), Washington (up 13%) and Pennsylvania (up 13%).

The average time to complete a foreclosure increased 3% in the fourth quarter compared to the third quarter to reach a record-high 564 days. States with the longest time to foreclose were New York (1,029 days), New Jersey (999 days) and Florida (944 days). All three are judicial states.

During the past eight years, 10.9 million U.S. properties have started the foreclosure process, and 5.6 million have been repossessed through foreclosure.

“Millions of homeowners are still living in the shadow of the massive foreclosure crisis that the country experienced over the past eight years since the housing price bubble burst - both in the form of homes lost directly to foreclosure, as well as home equity lost as a result of a flood of discounted distressed sales,” says Daren Blomquist, vice president at RealtyTrac, in the report. “But the shadow cast by the foreclosure crisis is shrinking as fewer distressed properties enter foreclosure and properties already in foreclosure are poised to exit in greater numbers in 2014, given the greater numbers of scheduled foreclosure auctions in 2013 in judicial states - which account for the bulk of U.S. foreclosure inventory.

“The push to schedule these auctions is certainly coming at an opportune time for the foreclosing lenders,” Blomquist adds. “There is unprecedented demand from institutional investors willing to pay with cash to buy at the foreclosure auction, helping to raise the value of properties with a foreclosure filing in 2013 by an average of 10 percent nationwide.”

 

Foreclosure Rate
Dives In November

The national foreclosure rate dropped 15% in November, compared to October, and was down 37% compared to November 2012, according to RealtyTrac’s monthly U.S. Foreclosure Market Report.

The month-over-month decrease was the biggest since November 2010, when U.S. foreclosure activity plummeted 21% following the revelation of the so-called robo-signing scandal in October 2010, the firm reports.

A total of 113,454 foreclosure filings - including default notices, scheduled auctions and bank repossessions - were recorded this November, according to the report. This compares to 133,919 filings recorded in October.

Foreclosure starts also fell considerably in November. A total of 52,826 properties started the foreclosure process for the first time - down 10% from October and down 32% compared to November 2012.

Foreclosure starts in November reached the lowest level since December 2005, when 49,236 properties started the foreclosure process.

Still, the recovery is spotty: Foreclosure starts increased in 15 states in November, compared to one year prior. States that saw foreclosure filings increase included Pennsylvania (up 233%), Delaware (up 104%), Maryland (up 74%), Oregon (up 38%) and Connecticut (up 37%).

Nationwide, there were a total of 30,461 bank repossessions in November, down 19% compared to October and down 48% compared to November 2012 - the lowest level since July 2007.

Only five states posted year-over-year increases in repossessions: Delaware (up 179%), Maryland (up 41%), Connecticut (up 9%), Maine (up 6%) and Iowa (up 2%).

Metropolitan areas with the highest foreclosure rates for November included Miami; Tampa, Fla.; Chicago; Riverside-San Bernardino, Calif.; and Baltimore. Only three of the 20 largest metros posted annual increases in foreclosure activity: Baltimore (up 46%); Philadelphia (up 34%); and Washington, D.C. (up 6%).

“While some of the decrease in November can be attributed to seasonality, the depth and breadth of the decrease provides strong evidence that we are entering the ninth inning of this foreclosure crisis with the outcome all but guaranteed,” says Daren Blomquist, vice president at RealtyTrac, in a statement. “While foreclosures will likely continue to stage a weak rally in certain markets [in 2014] as the last of the distress left over from the Great Recession is dealt with, it is highly unlikely that there will be a foreclosure comeback that poses any major threat to the solid housing recovery that has now taken hold.”

 

Shadow Inventory
Keeps Shrinking

Shadow inventory in the U.S. has fallen to 1.7 million homes - the lowest level since August 2008 - and foreclosure inventory is down 34% nationally from a year ago, according to CoreLogic’s November National Foreclosure Report, with a supplement featuring quarterly shadow inventory data as of October 2013.

According to CoreLogic analysis, there were 46,000 completed foreclosures in the U.S. in November 2013, down from 64,000 in November 2012 - a year-over-year decrease of 29%. On a month-over-month basis, completed foreclosures decreased 8.3%, from 50,000 in October 2013.

National residential shadow inventory was 1.7 million homes as of October 2013, accounting for a value of $256 billion, which is down 26.4% from $348 billion from the year before, according to the report.

CoreLogic says completed foreclosures are an indication of the total number of homes actually lost to foreclosure. As a basis of comparison to the 46,000 completed foreclosures reported for November 2013, completed foreclosures averaged 21,000 per month nationwide between 2000 and 2006 before the decline in the housing market in 2007. Since the financial crisis began in September 2008, there have been approximately 4.7 million completed foreclosures across the country, according to the company.

As of November 2013, approximately 812,000 homes in the U.S. were in some stage of foreclosure (known as the foreclosure inventory) compared to 1.2 million in November 2012 - a year-over-year decrease of 34%. Month over month, the foreclosure inventory was down 4.6% from October 2013 to November 2013. The foreclosure inventory as of November 2013 represented 2.1% of all homes with a mortgage, compared to 3% in November 2012, CoreLogic reports.

At the end of November 2013, there were fewer than 2 million mortgages, or 5%, in serious delinquency - defined as 90 days or more past due, including those loans in foreclosure or real estate owned (REO). CoreLogic says the rate of seriously delinquent mortgages is at its lowest level since November 2008.

“Nationally, loan performance continues to improve. The rate of seriously delinquent loans is at a new five-year low, down 26 percent relative to a year ago,” says Mark Fleming, chief economist for CoreLogic. “The shadow inventory continues to decline as well, decreasing at an average monthly rate of 46,000 units over the last year. Healthy market levels of shadow inventory are around 650,000 units, so there is more to be done, but the trend is in the right direction.”

“Consumer confidence is definitely up as the economic rebound gathers more steam,” adds Anand Nallathambi, president and CEO of CoreLogic. “As the negative equity crisis abates and home prices continue to rise, most people are prioritizing the payment of their mortgage obligations. The result is a double-digit drop in the inventory of seriously delinquent homes in 48 states as of October.”

CoreLogic gives the following foreclosure highlights from the report:

CoreLogic gives the following shadow inventory highlights:

 

NEGATIVE EQUITY

 

9.3 Million Still
‘Deeply Underwater’

As of December, there were 9.3 million U.S. residential properties still deeply underwater on their mortgages - representing 19% of all properties with a mortgage - according to RealtyTrac’s U.S. Home Equity & Underwater Report.

That’s down from 10.7 million residential properties deeply underwater in September, representing 23% of all properties with a mortgage; down from 10.9 million properties deeply underwater in January 2013, representing 26% of all properties with a mortgage; and down from 12.8 million residential properties deeply underwater in May 2012 - the peak for negative equity following the financial crisis - representing 29% of all properties with a mortgage.

RealtyTrac defines “deeply underwater” as homes where the loan amount is at least 25% higher than the property’s estimated market value.

About 48% of all properties in foreclosure were deeply underwater in December, according to the report. That compares to about 56% in September.

Meanwhile, about 31% of all residential properties in foreclosure had some positive equity, up from 24% in September.

The number of properties with at least 50% equity grew during the fourth quarter. As of September, about 7.4 million properties, or about 16% of all residential properties with a mortgage, had positive equity of at least 50%.

“During the housing downturn, we saw a downward spiral of falling home prices resulting in rising negative equity, which in turn, put millions of homeowners at higher risk for foreclosure when they encountered a trigger event such as job loss,” says Daren Blomquist, vice president at RealtyTrac. “Now we are seeing the reverse trend: rising home prices resulting in falling negative equity, which in turn, is giving millions of homeowners a lifeline to avoid foreclosure when they encounter a trigger event.

“On the other end of the spectrum, the percentage of equity-rich homeowners is nearing a tipping point that should result in a larger inventory of homes listed for sale and give the overall economy a nice shot in the arm in 2014,” Blomquist adds.

Still, there are “millions of homeowners who are in such a deep equity hole that it will take years for them to regain their equity,” Blomquist says.

“The longer these homeowners remain in a negative equity position without relief in the form of a principal loan balance reduction, the more likely that foreclosure will become the path of least resistance for them,” he adds.

 

Negative Equity
Situation Improves

Despite the fact that property values, on average, increased more than 12% from the end of 2012 to the end of 2013, about 6.4 million residential properties - or about 13% of all residential properties with a mortgage - were still in negative equity at the end of the third quarter of 2013, according to CoreLogic’s Equity Report.

This figure is down from 7.2 million homes, or 14.7% of all residential properties with a mortgage, at the end of the second quarter.

About 791,000 residential properties returned to a state of positive equity during the third quarter, bringing the total number of mortgaged residential properties with positive equity to 42.6 million.

The national aggregate value of negative equity was $397 billion at the end of the third quarter compared to $430 billion at the end of the second quarter - a decrease of $33.7 billion. This decrease was driven in large part by an improvement in home prices, the report states.

Of the 42.6 million residential properties with positive equity, about 10 million - or about 20.4% - have less than 20% equity. Slightly more than 1.5 million residential properties have less than 5% equity. These “near-negative” equity properties are considered at-risk should home prices fall, CoreLogic notes. s

Servicing Reports

Foreclosure Filings Dropped 26% In 2013

 

 

 

 

 

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