RealtyTrac: Foreclosure starts increase two months straight

“Not a cause for concern”

Foreclosure filings — default notices, scheduled auctions and bank repossessions — maintained their downward trajectory in December, falling 18% from a year ago to 1,117,426 properties in December 2014, the latest RealtyTrac foreclosure market report found.

This is down 61% from the peak of 2,871,891 properties with foreclosure filings in 2010.

The 1.1 million properties with foreclosure filings in 2014 was the lowest annual total since 2006, when there were 717,522 properties with foreclosure filings nationwide.

One in every 118 housing units had at least one foreclosure filing in 2014, marking the first time since 2006 that the annual foreclosure rate has been below 1% of all housing units. 

“The U.S. foreclosure numbers in 2014 show a foreclosure market that is close to finding a floor and stabilizing at a historically normal level,” said Daren Blomquist, vice president at RealtyTrac.

“But a recent surge in foreclosure starts and scheduled foreclosure auctions in several states in the last few months of 2014 indicate that lenders are gearing up for a spring cleaning of deferred distress in the first half of 2015 in some local markets,” he added.

Although foreclosure starts in December increased 6% from the previous month and 14% from a year ago to a 17-month high of 59,358, which is the second consecutive month where foreclosure starts increased from a year ago, it’s not a cause for concern, said Andres Carbacho-Burgos, senior economist at Moody’s Analytics, which analyzes RealtyTrac foreclosure data to forecast foreclosure trends. “The national pool of distressed mortgages has not increased despite the surge in foreclosure filings.”

The foreclosure start increases from a year ago were dominant in: Massachusetts (up 323%), New Jersey (up 262%), Nevada (up 194%), Missouri (up 88%), and New York (up 33%).

“The geographic location of the surge in foreclosure starts is not surprising,” Carbacho-Burgos continued. “The list of states with increased activity in the last months of 2014 includes those with judicial foreclosure backlogs such as Massachusetts, New Jersey, Pennsylvania and New York. Nevada is also on the list and is not a judicial state, but still has a substantial pool of seriously delinquent mortgages relative to the years before the housing crisis.”

Meanwhile, although scheduled foreclosure auctions nationwide were down in December compared to the previous month and year ago, increases in October and November resulted in an increase in the fourth quarter compared to a year ago — following 15 consecutive quarters of year-over-year decreases in scheduled foreclosure auctions.

 A total of 148,023 U.S. properties were scheduled for foreclosure auction in the fourth quarter, an increase of 4% from the third quarter and an increase of 7% from the fourth quarter of 2013 — the first annual increase in scheduled foreclosure auctions since the fourth quarter of 2010.

Bank repossessions dropped to the lowest level since 2006. Lenders repossessed 327,069 U.S. properties through foreclosure in 2014, down 29% from 2013 and down 69% from a peak of 1,050,500 to the lowest annual total since 2006. 

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