Foreclosures Fall to Five-year Low

by 11 Oct 2012
September foreclosure filings nationwide fell to their lowest level since July 2007, down 7 percent from August and 16 percent from September 2011.  However, 14 judicial foreclosure states — including Florida, Illinois, Ohio, New Jersey and New York — continued to buck the national trend, registering substantial year-over-year increases in foreclosure activity in September and the third quarter. The national decrease in September marked the ninth consecutive quarter with an annual decrease in foreclosure activity and helped drop the third quarter foreclosure numbers to the lowest level since the fourth quarter of 2007. Foreclosure filings for the quarter decreased 5 percent from the second quarter and 13 percent from the third quarter of 2011, according to RealtyTrac. In the West, declines were even more dramatic.  In California, notice of defaults were down 20.7 percent from the prior month, and down 48.1 percent compared to last year. In Arizona, new foreclosures were down 37.1 percent, in Nevada down 40.1 percent, down 40.0 percent in Oregon and Washington saw new foreclosures fall 31.2 percent from August.  Sales are also down with Arizona down 24.3 percent, Nevada down 19.5 percent, Oregon down 0.3 percent, and Washington down 33.5 percent from the prior month, ForeclosureRadar reported today. However, more foreclosures may be in store.  "It was recently reported that the nation's five largest mortgage servicers have implemented all of the 320 servicing standards required under the national mortgage settlement.  The continued decline in Foreclosure Starts clearly shows that even though servicers are now apparently in compliance and clear to move forward with foreclosures, they are still in no rush to foreclose on the majority of delinquent borrowers,” said Sean O'Toole, founder & CEO of ForeclosureRadar. Third quarter foreclosure activity increased on a year-over-year basis in 14 out of the 26 judicial states, including New Jersey (130 percent increase), New York (53 percent increase), Indiana (36 percent increase), Pennsylvania (35 percent increase), Connecticut (34 percent increase), Illinois (31 percent increase), Maryland (28 percent increase), South Carolina (16 percent increase), North Carolina (14 percent increase), and Florida (14 percent increase).  Among judicial states foreclosure activity in the third quarter decreased on annual basis in Massachusetts (16 percent decrease) and Wisconsin (12 percent decrease). Foreclosures in the third quarter took an average of 382 days to complete the foreclosure process, up from 378 days in the previous quarter and up from 336 days in the third quarter of 2011. It was the highest average number of days to foreclose going back to the first quarter of 2007. The average time to complete a foreclosure increased substantially from a year ago in several states where recent legislation and court rulings have extended the foreclosure process. These states included Oregon (up 62 percent to 193 days), Hawaii (up 62 percent to 662 days), Washington (up 62 percent to 248 days) and Nevada (up 42 percent to 520 days). The average time to foreclose decreased from a year ago in 15 states, including Arkansas (down 49 percent to 199 days), Michigan (down 15 percent to 226 days), Maryland (down 9 percent to 541 days), California (down 8 percent to 335 days), and New Jersey (down 4 percent to 931 days). New Jersey documented the second longest state foreclosure timeline in the third quarter behind New York, where the average time to complete a foreclosure was 1,072 days for properties foreclosed during the quarter. Florida registered the third highest state foreclosure timeline, 858 days — down slightly from 861 days in the previous quarter — and Illinois registered the fourth highest state foreclosure timeline, 673 days. Nationwide foreclosure starts decreased on an annual basis for the second straight month in September following three straight months of annual increases. Foreclosures were started on 87,066 U.S. properties during the month, down 12 percent from August and down 15 percent from September 2011. September foreclosure starts decreased on an annual basis in 31 states, including California (45 percent decrease), Arizona (34 percent decrease), Michigan (22 percent decrease), Georgia (21 percent decrease) and Texas (19 percent decrease). States with the biggest annual increases in foreclosure starts in September included New Jersey (424 percent increase), Pennsylvania (134 percent increase), New York (95 percent increase), Washington (60 percent increase) and Florida (24 percent increase). Florida foreclosure activity in the third quarter increased 14 percent from a year ago, the third consecutive quarter with an annual increase and boosting the state’s foreclosure rate to highest in the nation. One in every 117 Florida housing units had a foreclosure filing in the third quarter, more than twice the national average. Florida’s foreclosure rate also ranked highest in the nation in September, the first time since April 2005 that Florida has held the No. 1 spot. Florida foreclosure starts in September increased 24 percent from a year ago — the 11th straight month with an annual increase — and Florida bank repossessions (REO) increased 23 percent year over year — the ninth straight month with an annual increase. Arizona REOs in September increased 2 percent from a year ago, the first year-over-year increase in Arizona REOs since November 2011, but the state’s overall foreclosure activity was down on an annual basis both in September and the third quarter thanks to big drops in foreclosure starts. Despite those decreases, one in every 125 Arizona housing units had a foreclosure filing during the third quarter — the nation’s second highest state foreclosure rate. California also posted a foreclosure rate of one in every 125 housing units with a foreclosure filing in the third quarter, but the state’s foreclosure rate was slightly lower than that of Arizona, ranking No. 3 among all states for the quarter. A total of 109,369 California properties had foreclosure filings during the quarter, the highest of any state but still down from the previous quarter and a year ago. Other states with foreclosure rates ranking among the top 10 in the third quarter were Illinois (one in 126 housing units with a foreclosure filing), Georgia (one in 151), Nevada (one in 158), Ohio (one in 197), Michigan (one in 201), South Carolina (one in 215), and Colorado (one in 216).    


  • by William Matz | 10/13/2012 12:22:10 PM

    Our local experience in CA is certainly much different. We have seen a sharp spike in filings. I attribute that to the completion of the Atty Gen'l settlement and much stricter foreclosure laws that go into effect January 1, 2013. In addition, new foreclosure risks are emerging, e.g. @40% of FHA mortgages being underwater. SSo caution remains in order.

  • by Steve Cook | 10/13/2012 12:43:14 PM


    Thanks for your comment.

    Your views are interesting and seem to differ from the data. You might check out


  • by William Matz | 10/13/2012 1:12:52 PM

    Thanks for the reference. As I stated, I am only reporting what I see locally (N. of SF). E.g., a local paper for a town of only 11k had 15 notices of sale last issue. We may be some sort of anomaly. Also, I am talking only about Notices of Trustee Sale, which must be published, not the Notices of Default, which are just recorded.

    I remain concerned about a lingering cloud of mortgage mods, hybrid ARMs, and Option ARMs, which have been held in check by low interest rates. But when rates rise, many of these will be unsustainable. Amherst Securities Group predicted in 2010 that we would not see the peak in Option ARM foreclosures until Sept 2012, and that was before the delay cause by the AG investigation/settlement. Also, the @40% of FHA mortgages above. And, of course, all mortgages are at risk until the economy and jobs recover.


Is TILA-RESPA a good or bad thing long term?