Since major lenders delayed foreclosures to fix a broken process late last year, the amount of filings declined, but in May signs emerged the effect might be wearing off. Lenders filed default notices, scheduled auctions or repossessions on 214,927 properties in May, a 2% drop from the previous month and down 33% from one year ago, according to RealtyTrac, which tracks the filings. But activity spiked along various stages of the foreclosure process in certain states. “This pattern provides evidence that lenders are somewhat unevenly pushing batches of bad loans through foreclosure as they overhaul their paperwork and documentation procedures and as they determine that some local markets are able to absorb more foreclosure inventory,” said RealtyTrac CEO James Saccacio. Repossessions, or REO, increased 79% in Georgia, 36% in Virginia and 19% in Michigan. The increase is from one month ago. While those three states are considered non-judicial states, meaning a foreclosure does not have to proceed through the courts, activity spiked in judicial states as well. Scheduled auctions jumped 86% in Oklahoma, 56% in Maryland and 47% in Illinois, again just from April. On a metropolitan level, foreclosure filings more than doubled in Flint, Mich. The city now has one of the top-10 highest foreclosure rates. Saccacio said the inventory of properties in the foreclosure process declined steadily over the past six months because of 16 straight months declines in default notices. But the inventory of unsold REO increased in April and May even as repossessions slowed nationally. “That points to continued weak demand from buyers, making it tough for lenders to unload their REO inventory,” Saccacio said. “Even at a significantly lower level than a year ago, the new supply of REOs exceeds the amount being sold each month.” Speaking at REO Expo Tuesday, RealtyTrac Senior Vice President Rick Sharga said because of this inventory, a housing recovery could remain elusive until 2015. The May numbers show lenders recognize the work ahead and are starting to reboot the process. “Foreclosure processing delays continue to mask the true face of the foreclosure situation, although there were some clues in the May numbers of what lies behind that mask,” Saccacio said. Write to Jon Prior. Follow him on Twitter @JonAPrior.

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