RealtyTrac: 2Q foreclosure activity rises as some states see reboot
Foreclosure starts in the second quarter saw a 9% increase from the first quarter and rose 6% from 2Q 2011, marking the first year-over-year increase in quarterly foreclosure starts since the fourth quarter of 2009, according to RealtyTrac's Midyear 2012 Foreclosure Market Report.
"Foreclosure starts began boiling over in more markets in the first half of the year, particularly in the second quarter, when rising foreclosure starts spread from primarily judicial foreclosure states in the first quarter to more than half of all nonjudicial foreclosure states in the second quarter," said Brandon Moore, CEO of RealtyTrac.
A total of 31 states posted year-over-year increases in foreclosure starts in the second quarter — 17 judicial foreclosure states and 14 nonjudicial foreclosure states.
In California, June also brought a 18% year-over-year increase in foreclosure starts, boosting the state's foreclosure rate to the highest nationwide for the month, marking the first time California's monthly foreclosure rate ranked No. 1 since RealtyTrac began reporting the numbers in 2005.
Nevada's foreclosure starts were up 61% from the first quarter to the second, indicating lenders are beginning to adjust to an October 2011 law that required additional documentation to initiate the foreclosure process.
The report shows a total of 1.05 million properties with foreclosure filings, including default notices, auction sale notices and bank repossessions, in the first half of the year, up 2% from the previous six months, down 11% from the first half of 2011.
Nevada, Arizona and Georgia came in the top spots for foreclosure filings for the first half of the year.
Despite Nevada's 61% year-over-year drop in foreclosure activity, the state still ranked No. 1 on the list with one in every 57 homes having a foreclosures filing compared to 1 in 126 nationally.
Arizona, which had the second highest foreclosure-filing rate, saw first-half filings decrease 37% from the same time last year, but one in 53 homes still had a foreclosure filing.
Coming in third, Georgia's foreclosure starts in the second quarter increased 5% from the first quarter and were up 23% from the year-ago quarter.
Nationwide, overall foreclosure activity decreased in June on a year-over-year basis for the 21st straight month, while foreclosure starts for the month increased annually for the second consecutive month.
Brandon Moore, CEO of RealtyTrac, said the additional scrutiny on how lenders and mortgage servicers process foreclosures along with additional measures by the federal government and several state governments to prevent foreclosures kept foreclosures down on a national scale, but several states still saw dramatic rises.
The first six months of 2012 saw a 2% increase in foreclosure from the last half of 2011, but filings were still down 11% from the same time period last year.
First-half foreclosure activity increased from a year ago in 20 states, including Indiana (32%), Pennsylvania (24%), South Carolina (23%), Connecticut (23%), Florida (23%) and Illinois (22%). But even with those dramatic increases, Nevada, Arizona and Georgia posted the top state foreclosure rates in the first half of the year.
Foreclosure completion time was up in the second quarter, increasing to 378 days from the initial foreclosure notice to the completed foreclosure, compared to the first quarter's 378 days. The number is a record high going back to the first quarter of 2007.
A few states with some of the longest foreclosure timelines, however, saw their average foreclosure time decrease. The average time to foreclosure in New York was down from 1,056 days in the first quarter to 1,001 days in the second quarter — a 5% drop — though the state still has the longest foreclosure timeline nationwide.
It was also down 3% in New Jersey, the state with the second longest timeline, and was down 1% in Pennsylvania, which has the seventh longest timeline.
"Lenders and servicers are slowly but surely catching up with the backlog of delinquent loans that under normal circumstances would have started the foreclosure process last year, and that catching up is why the average time to complete the foreclosure process started to level off or decrease in some states in the second quarter," Moore said.
"The increases in foreclosure starts in the first half of the year will likely translate into more short sales and bank repossessions in the second half of the year and into next year."