Default Notices Jump 33 Percent from July to August as Lenders Resume Processing Non-Performing Residential Loans

There are more than 4 million homes in the U.S. today that are 90 days or more in arrears.  The outcome of these will be one of three solutions:

Foreclosure
Loan modification
Short sale
 
While the pain of losing a home to foreclosure cannot be overlooked, the U.S. housing market will not recover until the massive surplus of homes with loans not being paid are finally in the hands of individuals or investors either servicing their debt or having paid cash.  The quicker these homes are off the market and out of either the actual or shadow inventory, the sooner the housing market will return to normal.

RealtyTrac, the premier source of residential mortgage information in the U.S., report a surge in default notices with a sequential July to August 2011 gain of 33 percent.  This was the largest increase in four years — although August default notices were 18 percent less than in the same month in 2010.

One in every 570 U.S. homes received a foreclosure notice in August 2011. 

Banks are on track to repossess 800,000 homes this year vs. 1 million last year.

Default notices increased more than 40 percent from July to August 2011 in New Jersey (up 42 percent), Indiana (up 46 percent) and California (up 55 percent).  All of these, however, remain below the levels reported one year ago.

Many are interpreting increased lender foreclosure activity as a positive, finally overcoming the delays that arose a year ago.  These moves are essential to an eventually recovery in the housing market.

August scheduled foreclosure numbers at 84,405 were 43 percent less than the same month in 2010.

Lender repossessions (REOs) tallied 64,813 in August 2011, a 4 percent sequential decline and a 32 percent year-over-year reduction.  This was a six-month low.
 
Five states accounted for 53 percent of August 2011 foreclosure filings.

            California       59,383
            Florida            23,569
            Michigan        13,016
            Illinois             12,493
            Georgia          11,743

Top States (foreclosure rates – percent)

1.  Nevada
Nation’s highest foreclosure rate for 56th straight month

One in every 118 properties with foreclosure filings in August

9,677 foreclosure filings

2.  California
Second Highest foreclosure rate

One in every 226 housing units

59,383 foreclosure filings

3.  Arizona
One in every 248 housing units

23,569 foreclosure filings

4.  Georgia

One in every 346 housing units

11,743 foreclosure filings

5.  Idaho
One in every 348 housing units

1,860 foreclosure filings

6.  Michigan

One in every 349 housing units

13,016 foreclosure filings

7.  Florida
One in every 376 housing units

23,569 foreclosure filings

8.  Illinois
One in every 424 housing units

12,493 foreclosure filings

9.  Colorado
One in every 439 housing units

4,993 foreclosure filings

10.  Utah
One in every 450 housing units

2,119 foreclosure filings

To contrast the extremes from the national average rate of one in every 570, consider these states:

 West Virginia
           One in every 11,314 housing units

           79 foreclosure filings

 Vermont
           One in every 34,916 housing units 

           9 foreclosure filings

The bottom line is that lenders are finally accelerating the foreclosure process, and that is good news from the perspective of a return to normal in the U.S. housing markets.

 

 

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