In the first quarter of 2012, foreclosure activity has fallen to the lowest level since the fourth quarter of 2007. This was reported by RealtyTrac, the leading online marketplace of foreclosure properties, while releasing its foreclosure market report. According to the report, foreclosure filings for the reported quarter dipped 2% from the prior quarter and 16% from the prior-year quarter, with a total of 572,928 properties receiving default, auction or repossession notices.
Though there was a drop in foreclosures in the first quarter of 2012, these will surely increase in the upcoming months following the $25 billion settlement deal that took place between five mortgage servicers – JPMorgan Chase & Co. (JPM), Bank of America Corporation (BAC), Citigroup Inc. (C), Ally Financial Inc. and Wells Fargo & Company (WFC), 49 states’ attorneys general and the regulators. The deal is expected to speed up the rate of the foreclosure activities across the nation, which was almost frozen till now.
The major indicator, which confirmed that the foreclosures will shot up over the next several months, is the rise in the default notices issued and foreclosure auctions (depending on the state’s foreclosure procedure). Default notices increased 7% in March 2012 from the previous month, but fell 11% from the prior-year month.
Additionally, properties foreclosed in the first three months of 2012 took an average of 370 days to complete the foreclosure process, up from 348 days in the previous quarter. Further, the top 10 states with the highest foreclosure activities were California, Florida, Illinois, Georgia, Michigan, Arizona, Texas, Ohio, Pennsylvania and Wisconsin.
Moreover, the primary reason for the dip in overall foreclosures for the quarter under review is the decline in foreclosure activity in 24 states with a non-judicial foreclosure process. In these states, foreclosures declined 8% from December 2011 quarter and 28% from March 2011 quarter to 329,854 properties.
However, the 26 states, where a judicial foreclosure process is followed, witnessed an increase in foreclosures. Here, foreclosure filings surged 8% from the prior quarter and 10% from the prior-year quarter, with a total of 243,074 properties receiving default, auction or repossession notices.
With nearly all the problems related to flawed paper work getting resolved, the downtrend in foreclosures will get reversed very soon. Moreover, the settlement deal clearly describes the procedures to be followed while foreclosing a property. This will allow the mortgage servicers to step up the foreclosure activities.
Also, there will be additional pressure on the home prices across the nation as many properties are expected to come to the market due to increased foreclosure activities. Though the huge surge in foreclosures may dampen the housing prices in the near-term, this will enable the housing market to revive over the longer term.
Moreover, we hope that there would be enough number of buyers for these properties; otherwise the housing market will have a little chance to regain a solid foothold. As for now, we should gear up to see an exceptional rise in foreclosure activities in the upcoming quarters.
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