“The widespread rise in foreclosure activity in the third quarter compared to a year ago is the result of two starkly different trends taking place,” said Daren Blomquist, vice president at RealtyTrac. “In states such as New Jersey, Massachusetts, and New York, a flood of deferred distress from the last housing crisis is finally spilling over the legislative and legal dams that have held back some foreclosure activity for years.
"That deferred distress often represents properties with deferred maintenance that will sell at more deeply discounted prices, creating a drag on overall home values,” he added. “On the other hand, in states such as Texas, Michigan and Washington, the third-quarter increases are a sign that the foreclosure market has settled into a normalized pattern close to or even below pre-crisis levels, and in those states the overall housing market should easily absorb the additional foreclosure activity with little impact on home values.”
New Jersey had the highest foreclosure rate in the U.S., while Florida had the second highest. The New Jersey foreclosure rate jumped 27% from last year. One in every 171 housing units in the state had a foreclosure filing in the third quarter – more than twice the national average. Meanwhile, Florida – formerly the state with the highest foreclosure rate – saw its rate drop 17% from a year ago.
U.S. bank repossessions in the third quarter were up 3% from the same period last year, according to RealtyTrac. This marked the second quarter in a row that saw increased annual foreclosure activity after 19 straight quarters of year-over-year drops.