Understanding Mortgage Trends and Foreclosure Risks

You may have seen headlines declaring that another housing crisis is right around the corner. What those stories probably won’t tell you is that foreclosures, which triggered the last crisis, are at an all-time low.

Real estate data provider ATTOM Data Solutions reports that foreclosure activity in 2019 fell 21 percent from the year before and was down 83 percent from the peak in 2010. It was at its lowest level last year since the company began tracking the data in 2005.

"The continued decline in distressed properties is one of many signs pointing to a much-improved housing market compared to the bad old days of the Great Recess

But that doesn’t mean the market is perfectly balanced, because it isn’t. Because of a shortage of housing, prices have risen faster than incomes, and affordability has become an issue in many markets. Teta notes that foreclosure starts increased in about a third of the nation's metro housing markets in 2019. Nationally, the number also ticked up a bit in December.

"While that's not a major worry, it's something that should be watched closely in 2020," he said.

Not very similar to the 2008 crisis

When some real estate articles warn of another housing crisis, they usually base that fear on rapidly rising home prices, pointing out that was the pattern during the housing bubble. But that’s pretty much where the similarity ends.

During the bubble days, builders were putting up new homes as fast as they could. Mortgage brokers would loan money to anyone whether they could afford the house or not. The broker didn’t care because they would sell the mortgage within days to a big bank that would securitize it and sell it on Wall Street. Everyone kicked the can down the street.

The whole house of cards began to tumble when the new homeowners, who couldn’t afford the homes they purchased, defaulted on their loans and triggered a wave of home foreclosures, causing property values to plunge.

Tougher loan standards

Today, mortgage underwriters are much stricter than during the bubble days. They don’t write a mortgage unless they are convinced the buyer will be able to afford it.

The reason for the recent rise in home prices is very different from the factors that drove home prices higher in the early 2000s. Since the housing crash, builders have produced new homes at about half the rate they did before the crash, leading to a housing shortage.

More buyers competing for fewer available homes has caused prices to go up. If builders were to start producing more entry-level homes, there’s no doubt that prices would moderate.

If foreclosures are the canary in the housing market’s coal mine, that bird continues to sing a happy tune. Not only are overall foreclosure filings 83 percent lower than their 2010 peak, but bank repossessions are also down 86 percent.

Foreclosure activity -- default notices, scheduled auctions, and bank repossessions -- fell to a 14-year low in the third quarter of the year, suggesting significant stability in the housing market.

ATTOM Data Solutions, which tracks housing data, reports that foreclosure activity was down 6 percent from the previous quarter and was 19 percent lower than the third quarter of 2018. It hit the lowest level since the second quarter of 2005.

More stringent standards to qualify for a mortgage plus very low unemployment rates have combined to almost make foreclosure a rarity.

"Foreclosure activity continues to decline across the country, which is a good sign that the housing market and the broader economy remain strong – and that the lending excesses that helped bring down the economy during the Great Recession remain a memory," said Todd Teta, chief product officer at ATTOM Data Solutions. 

No reason for complacency

But Teta says the latest report should not lead to complacency, noting that foreclosure activity can vary widely from state to state, city to city, and neighborhood to neighborhood.

"Overall, the foreclosure numbers reflect a market in which buyers can afford their homes and lenders remain careful in loaning to home buyers who have little chance of repaying," he said.

Foreclosures are highly disruptive to the housing market. When one house goes into foreclosure, the other houses in the neighborhood usually lose value. When several houses in a neighborhood go into default -- which happened frequently after the housing market crash -- it can be devastating and create situations where highly leveraged homeowners owe more on their mortgages than their homes are worth.

Troubling exceptions

While the national trend shows far fewer foreclosures, there are troubling exceptions. Fourteen states actually saw foreclosure activity rise in the third quarter. It was up 33 percent in Montana, 32 percent in Georgia, 16 percent in Washington, and 15 percent in Louisiana.

The highest rates of foreclosure occurred in Delaware, New Jersey, Maryland, and Florida.

Foreclosure happens when a homeowner defaults on a mortgage. The legal process can be lengthy from the time a foreclosure notice is filed to the time the lender auctions the property.

In addition to defaulting on a mortgage, a homeowner may also lose a home to foreclosure by failing to pay property taxes.

U.S. foreclosure activity fell sharply in the first quarter of the year, hitting the lowest level since the first quarter of 2008, just before an avalanche of foreclosures triggered by the financial crisis.

The quarterly report by ATTOM Data Solutions showed there were 161,875 U.S. properties in some stage of foreclosure during the first quarter of 2019, down 23 percent from the last quarter of 2018 and down 15 percent from a year ago.

Foreclosure activity ticked up in March but still remained far below last year’s pace. Falling 21 percent compared to March 2018 foreclosures, it was the ninth straight month foreclosures had declined on a year-over-year basis.

‘Well below pre-recession levels’

"While some markets saw a slight uptick in foreclosure filings, that is above pre-recession levels, the majority of the major markets are well below pre-recession levels," said Todd Teta, chief product officer at ATTOM Data Solutions. "While we did see a slight increase in U.S. foreclosure starts from last quarter, bank repossessions reached an all-time low in the first quarter of 2019, showing continuing signs of a strong housing market."

It may also signal a stronger economy with more stable employment. Additionally, stricter underwriting standards adopted by the mortgage industry after the housing market crashed in 2009 probably helped.

During the early 2000s housing bubble, lenders made loans to borrowers without fully verifying their finances. As a result, many people who couldn’t afford homes were able to buy one, resulting in a wave of foreclosures once the market crashed.

Today, lenders closely verify income and credit documents and require buyers to be employed for at least two consecutive years in the same industry.

Stable markets

The most stable housing market in the first quarter was San Jose, where foreclosure activity was down 79 percent from its pre-crash average. Foreclosures were down 77 percent in Memphis and  Dallas-Fort Worth, down 74 percent in Las Vegas, and down 68 percent in Phoenix.

Markets still seeing above pre-recession foreclosure levels include Baltimore, Washington D.C., Philadelphia, New York, Hartford, Conn., Richmond, Va., Providence, R.I, and New Orleans.

Notably, bank repossessions (REO) were lower in 48 states and the District of Columbia. Lenders repossessed 35,787 properties through foreclosure in the first quarter, down 21 percent from thefoourth quarter of 2018 and down 45 percent from a year ago.

Foreclosure activity hit an 11-year low in this year's third quarter, as an improving economy and stricter mortgage standards helped stabilize the housing market to pre-2008 levels.

The Third Quarter 2017 U.S. Foreclosure Market Report, compiled by ATTOM Data Solutions, shows there were 191,824 properties subject to foreclosure filings, which include default notices, scheduled auctions or bank repossessions.

The number is down 13 percent from the second quarter and 35 percent lower from a year ago. It's the lowest level since the second quarter of 2006, at the height of the housing bubble.

This does not appear to be a one-off occurrence. The drop in foreclosure activity in the last quarter was the fourth straight quarter in which it has tracked below the pre-recession average.

“Legacy foreclosures from the high-risk loans originating between 2004 and 2008 have largely been cleared out of the distressed market pipeline,” said Daren Blomquist, senior vice president at ATTOM Data Solutions.

Tougher lending standards

New post-crash mortgages must adhere to stricter standards and are subsequently performing much better, Blomquist says. The exception is FHA loans made in 2014.

Blomquist says those loans aren't performing nearly as well, with a foreclosure rate higher than any year since 2009. He explains it by noting there was a gradual loosening of credit that year.

Lenient lending standards in the early 2000s, along with a large number of subprime mortgages, created a “foreclosure tsunami” that was out of control by 2007. A year later, one in every 538 U.S. households received a foreclosure filing during March 2008, a five percent rise over the previous month and a shocking 57 percent increase over March 2007.

Now, applicants are required to have two solid years of employment history at the same company or in the same industry, have a good credit score, and a debt to income ratio of no more than 43 percent.

According to the Consumer Financial Protection Bureau (CFPB), studies have shown that mortgage applicants with a higher debt-to-income are more likely to have trouble making their monthly mortgage payments.

Benefits for homeowners

At the height of the foreclosure crisis, buyers had a lot more homes to choose from than they do today. However, the decline in foreclosures has produced major benefits for homeowners. The housing market is now more stable and home prices have risen back to their pre-crash levels in many housing markets.

Matthew Gardner, chief economist at Windermere Real Estate, covering the Seattle market, says foreclosure activity there is at a record low.

“As long as the regional economy continues to flourish, I do not expect to see foreclosures rise,” Gardner said.

The current threat to the housing market, he says, is price growth, which is good for homeowners but has started to negatively affect affordability, and according to Gardner, “is becoming troublesome.”

The 30-year fixed mortgage rate (FRM) as charted by Freddie Mac has fallen to its lowest level since November 10, 2016.

The benchmark rate averaged 3.86% in the week ending August 24, down three basis points from the previous week's level of 3.89%. The FRM was at 3.43% at this time a year ago.

“The 10-year Treasury yield fell 6 basis points this week amid concerns over lagging inflation,” said Freddie Mac Chief Economist Sean Becketti. “The 30-year mortgage rate also declined for the fourth consecutive week, dropping 3 basis points to a new year-to-date low of 3.86 percent."

The rate for the 15-year FRM was unchanged at 3.16%, well above the year-ago level of 2.74%. and the 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) inched up one basis point from a week earlier to 3.17%. A year ago at this time, it averaged 2.75%.

Bankrate

Bankrate.com, meanwhile, is reporting that it's calculation shows mortgage rates tie the lowest level of 2017.

The 30-year FRM is now at now 4.02%, a level not seen since June 14th and lowest since November 2016.

The 15-year FRM rate is 3.23% -- down 4 basis points from last week, and the5/1 ARM is up 1 basis point to 3.50%.

Analysts at Bankrate say high stock market valuations are increasingly prompting investors to move into safe haven government bonds at the first sign of trouble. Mortgage rates are closely related to yields on long-term government bonds, which moved lower over the past week as markets were buffeted by political drama in Washington and a terrorist attack in Barcelona.

Bankrate estimates that at the current average 30-year fixed mortgage rate of 4.05%, the monthly payment for a $200,000 loan is $957.14.

Chase is coming after American Express' Platinum Card business, and that's potentially good news if you're a homebuyer with a Chase Sapphire card. The reason is that Chase Mortgage is offering 100,000 Chase Ultimate Rewards points for existing Sapphire customers who purchase a mortgage with Chase.

The exclusive offer, and the first of its kind for Chase, is now available to eligible Sapphire customers through August 6. Chase has been positioning the Sapphire card to appeal to affluent millennials who may find the Platinum Card a bit, well, stuffy.

So, the thinking goes, what better way to cement a relationship with the millennial crowd than to give them a huge bonus when they're buying their first house. 

"New wave of homebuyers"

“We want to show the true benefit of being a Chase customer throughout the many stages of life, whether it’s opening your first credit card or buying your first home,” said Amy Bonitatibus, Chief Marketing Officer for Chase Mortgage. "We designed this exclusive mortgage offer for our Chase Sapphire customers to reach a new wave of homebuyers."

That "new wave," of course, is code for millennials, who have been making up a growing part of Chase's customer base. Customers under the age of 35 made up 36 percent of Chase’s mortgage originations volume in 2016, up from 20 percent in 2015.

The number of completed foreclosures and the foreclosure rate skidded downward during the final month of 2016.

Property information provider CoreLogic reports completed foreclosures plunged 40% in December from the same month a year earlier. That translates to a drop of 21,000 in December 2016 from 36,000 in December 2015 and a decrease of 82% from the peak of 118,336 in September 2010.

During the same month, the foreclosure inventory was down 30%.

The foreclosure inventory represents the number of homes at some stage of the foreclosure process and completed foreclosures reflect the total number of homes lost to foreclosure.

Since the start of the financial meltdown in September 2008, there have been approximately 6.5 million completed foreclosures nationally. Approximately 8.6 million homes have been lost to foreclosure since homeownership rates peaked in the second quarter of 2004.

As of last December, the national foreclosure inventory included approximately 329,000, or 0.8%, of all homes with a mortgage.

Mortgage delinquencies

The number of mortgages in serious delinquency -- 90 days or more past due including loans in foreclosure or REO -- fell 19.4% from December 2015. That means one million mortgages, or 2.6%, in serious delinquency -- the lowest level since August 2007. Decreases in serious delinquency were reported in 48 states and the District of Columbia.

“While the decline in serious delinquency has been geographically broad, some oil-producing markets have shown the effects of low oil prices on the housing market,” said Dr. Frank Nothaft, chief economist for CoreLogic. “Serious delinquency rates rose in Louisiana, Wyoming and North Dakota, reflecting the weakness in oil production.”

Report highlights

• On a month-over-month basis, completed foreclosures fell 8.1% percent to 21,000 in December. As a basis of comparison, before the decline in the housing market in 2007, completed foreclosures averaged about 22,000 per month nationwide between 2000 and 2006.
• On a month-over-month basis, the December 2016 foreclosure inventory dipped 1.9%.
• The five states with the highest number of completed foreclosures in the 12 months ending in December 2016 were Florida (45,000), Michigan (30,000), Texas (24,000), Ohio (21,000), and California (19,000).These five states accounted for 36% of all completed foreclosures nationally.
• Four states and the District of Columbia had the lowest number of completed foreclosures in the 12 months ending in December: North Dakota (182), the District of Columbia (254), West Virginia (312), Montana (630), and Alaska (668).
• Four states and the District of Columbia had the highest foreclosure inventory rate in December: New Jersey (2.8%), New York (2.7%), Maine (1.8%), Hawaii (1.7%), and the District of Columbia (1.6%).
• The five states with the lowest foreclosure inventory rate in December 2016 were Colorado (0.2%), Minnesota (0.3%), Utah (0.3%), Arizona (0.3%), and California (0.3%).

The Consumer Financial Protection Bureau (CFPB) has taken action against a major mortgage lender and a loan service involved in an illegal kickback scheme.

Prospect Mortgage, LLC, will pay a $3.5 million penalty while two real estate brokers and the servicer, Planet Home Lending, will pay an additional $495,000.

“Today’s action sends a clear message that it is illegal to make or accept payments for mortgage referrals,” said CFPB Director Richard Cordray. “We will hold both sides of these improper arrangements accountable for breaking the law, which skews the real estate market to the disadvantage of consumers and honest businesses.”

The players

Prospect Mortgage, LLC, headquartered in Sherman Oaks, Calif., is one of the largest independent retail mortgage lenders in the United States, with nearly 100 branches nationwide.

The CFPB said that from at least 2011 through 2016, Prospect Mortgage used a variety of schemes to pay kickbacks for referrals of mortgage business in violation of the Real Estate Settlement Procedures Act. For example, Prospect established marketing services agreements with companies, which were framed as payments for advertising or promotional services, but in this case actually served to disguise payments for referrals. 

RGC Services, Inc., (doing business as ReMax Gold Coast), based in Ventura, Calif., and Willamette Legacy, LLC, (doing business as Keller Williams Mid-Willamette), based in Corvallis, Ore., are two of more than 100 real estate brokers with which Prospect had improper arrangements.

The CFPB’s investigation found that ReMax Gold Coast and Keller Williams Mid-Willamette accepted illegal payment for referrals. Both companies were among more than 100 brokers who had marketing services agreements, lead agreements, and desk-license agreements with Prospect, which were, in whole or in part, vehicles to obtain illegal payments for referrals.

Planet Home Lending, LLC is a mortgage servicer headquartered in Meriden, Conn., that referred consumers to Prospect Mortgage and accepted fees in return.

Two members of the Citigroup Inc. family have been ordered to pay nearly $29 million for giving troubled homeowners the runaround when they tried to save their homes. The Consumer Financial Protection Bureau announced the actions against CitiFinancial Servicing and CitiMortgage today.

The agency said the mortgage servicers kept borrowers in the dark about options to avoid foreclosure or burdened them with excessive paperwork demands in applying for foreclosure relief. The CFPB is requiring CitiMortgage to pay an estimated $17 million to compensate wronged consumers, as well as a civil penalty of $3 million; CitiFinancial Services will also be required to refund approximately $4.4 million to consumers and pay a civil penalty of $4.4 million.

“Citi’s subsidiaries gave the runaround to borrowers who were already struggling with their mortgage payments and trying to save their homes,” said CFPB Director Richard Cordray. “Consumers were kept in the dark about their options or burdened with excessive paperwork. This action will put money back in consumers’ pockets and make sure borrowers can get help they need.”

CitiFinancial Servicing

As a mortgage servicer, CitiFinancial Servicing collects payments from borrowers for loans it originates. It also handles customer service, collections, loan modifications, and foreclosures.

The CFPB said the company:

• Kept consumers in the dark about foreclosure relief options: When borrowers applied to have their payments deferred, CitiFinancial Servicing failed to consider it as a request for foreclosure relief options. As a result, borrowers may have missed out on options that may have been more appropriate for them. 
• Misled consumers about the impact of deferring payment due dates: Consumers were kept in the dark about the true impact of postponing a payment due date. CitiFinancial Servicing misled borrowers into thinking that if they deferred the payment, the additional interest would be added to the end of the loan rather than become due when the deferment ended. In fact, the deferred interest became due immediately.   

• Charged consumers for credit insurance that should have been canceled: Some borrowers bought CitiFinancial Servicing credit insurance, which is meant to cover the loan if the borrower can’t make the payments. Under its terms, CitiFinancial Servicing was supposed to cancel the insurance if the borrower missed four or more monthly payments. But between July 2011 and April 30, 2015, about 7,800 borrowers paid for credit insurance that CitiFinancial Servicing should have canceled under those terms. 

• Prematurely canceled credit insurance for some borrowers: CitiFinancial Servicing prematurely canceled credit insurance for some consumers. Some of those borrowers later had claims denied because CitiFinancial Servicing had improperly canceled their insurance.

• Sent inaccurate consumer information to credit reporting companies: CitiFinancial Servicing incorrectly reported some settled accounts as being charged off. 

• Failed to investigate consumer disputes: CitiFinancial did not investigate consumer disputes about incorrect information sent to credit reporting companies within the required time period.

The full text of the CitiFinancial Servicing consent order is available online. 

CitiMortgage

CitiMortgage is a mortgage servicer for Citibank and government-sponsored entities such as Fannie Mae and Freddie Mac. It also fields consumer requests for foreclosure relief, such as repayment plans, loan modification, or short sales.

Borrowers at risk of foreclosure or otherwise struggling with their mortgage payments can apply to their servicer for foreclosure relief. In this process, the servicer requests documentation of the borrower’s finances for evaluation. 

However, some borrowers who asked for assistance were sent a letter by CitiMortgage demanding dozens of documents and forms that had no bearing on the application or that the consumer had already provided. Many of these documents had nothing to do with a borrower’s financial circumstances and were actually not needed to complete the application.

The full text of the CitiMortgage consent order is available online.

The number of completed foreclosures nationwide posted a year-over-year decline of 25.9% in November to 26,000, according to property information provider CoreLogic. That represents a plunge of 78.2% from the peak of 118,339 in September 2010.

At the same time, the foreclosure inventory -- the number of homes at some stage of the foreclosure process -- declined by 30%.

As of November, the national foreclosure inventory included approximately 325,000, or 0.8%, of all homes with a mortgage, compared with 465,000 homes, or 1.2%, a year earlier.

In addition, the number of mortgages in serious delinquency -- 90 days or more past due including loans in foreclosure or REO – was down 22.1% from November 2015, with 1 million mortgages, or 2.5%, in serious delinquency. That's the lowest level since August 2007.

"The decline in serious delinquency has been substantial, but the default rate remains high in select markets," said CoreLogic Chief Economist Dr. Frank Nothaft. "Serious delinquency rates were the highest in New Jersey and New York at 5.6% and 5%, respectively. In contrast, the lowest delinquency rate occurred in Colorado at 0.9% where a strong job market and home-price growth have enabled more homeowners to stay current."

Report highlights

• On a month-over-month basis, completed foreclosures declined by 14.1% to 26,000 in November from the 30,000 reported for October. As a basis of comparison -- before the housing market crash in 2007 -- completed foreclosures averaged about 22,000 per month nationwide between 2000 and 2006.
• On a month-over-month basis, the November foreclosure inventory fell 2.4% compared with October.
• The five states with the highest number of completed foreclosures in the 12 months ending in November were Florida (48,000), Michigan (31,000), Texas (25,000), Ohio (22,000), and Georgia (20,000).These five states account for 36% of completed foreclosures nationally.
• Four states and the District of Columbia had the lowest number of completed foreclosures in the 12 months ending in November: the District of Columbia (221), North Dakota (260), West Virginia (375), Alaska (616), and Montana (627).
• Four states and the District of Columbia had the highest foreclosure inventory rate in November: New Jersey (2.8%), New York (2.6%), Maine (1.7%), Hawaii (1.7%), and the District of Columbia (1.6%).
• The five states with the lowest foreclosure inventory rate in November were Colorado (0.2%), Minnesota (0.3%), Arizona (0.3%), Utah (0.3%), and California (0.3%).

Another month of declines in both completed foreclosures and the foreclosure inventory.

Property information provider CoreLogic reports completed foreclosures declined by 7.0% in September from the same time a year ago, while the foreclosure inventory plunged 31.1%.

The number of completed foreclosures nationwide was down year-over-year by 3,000 -- to 36,000 in September 2016, representing a drop of 69.7% from the peak of 118,222 in September 2010.

The foreclosure inventory represents the number of homes at some stage of the foreclosure process and completed foreclosures reflect the total number of homes lost to foreclosure.

Since the financial meltdown began in September 2008, there have been approximately 6.4 million completed foreclosures nationally. Since homeownership rates peaked in the second quarter of 2004, there have been approximately 8.5 million homes lost to foreclosure.

As of September, the national foreclosure inventory included approximately 340,000, or 0.9%, of all homes with a mortgage, versus 493,000 homes, or 1.3%, the year before.

Mortgage delinquencies

The number of mortgages in serious delinquency -- 90 days or more past due including loans in foreclosure or REO -- plummeted 24.8% from September 2015 to September 2016, with 1 million mortgages, or 2.6%, in serious delinquency. That's the lowest level since August 2007. Decreases were seen in 48 states and the District of Columbia.

“This improvement is continued evidence of the recovery in the housing market,” said Dr. Frank Nothaft, chief economist for CoreLogic, “especially given that the decreases were fairly uniform in most cities across the country.”

Report highlights

• On a month-over-month basis, completed foreclosures increased by 5.2% to 36,000 in September from the 34,000 reported for August. As a basis of comparison, before the decline in the housing market in 2007, completed foreclosures averaged 21,000 per month nationwide between 2000 and 2006.
• The September foreclosure inventory was down 3.1% compared with August 2016.
• The five states with the highest number of completed foreclosures in the 12 months ending in September were Florida (53,000), Texas (27,000), Michigan (24,000), Ohio (23,000), and Georgia (21,000).These five states accounted for 36% of completed foreclosures nationally.
• Four states and the District of Columbia had the lowest number of completed foreclosures in the 12 months ending in September: the District of Columbia (186), North Dakota (338), West Virginia (447), Alaska (643), and Montana (701).
• Four states and the District of Columbia had the highest foreclosure inventory rate in September: New Jersey (3.0%), New York (2.7%), Maine (1.8%), Hawaii (1.8%), and the District of Columbia (1.6%).
• The five states with the lowest foreclosure inventory rate in September 2016 were Colorado (0.3%), Minnesota (0.3%), Arizona , Michigan, and Utah (all at 0.3%).

Jobless claims

The decline last week in first-time applications for state unemployment benefits more than wiped out the increase posted the previous week.

The Department of Labor (DOL) reports initial jobless claims were down by 11,000 in the week ending November 5 to a seasonally adjusted 254,000.

It's now been 88 straight weeks that claims have been below 300,000 the longest streak since 1970.

The four-week moving average inched up 1,750 from a week earlier to 259,750. This measure is seen as a better gauge of the labor market as it lacks the volatility seen in the weekly headcount.

The complete report may be found on the DOL website.

The nation's foreclosure inventory plunged 29.6% and completed foreclosures were down an even sharper 42.4% from a year earlier, according to the CoreLogic National Foreclosure Report.

In another way of looking at it, the number of completed foreclosures nationwide posted a year-over-year decline of 27,000 -- to 37,000 in August 2016 -- representing a drop of 69% from the peak of 118,221 in September 2010.

Foreclosure inventory

The foreclosure inventory represents the number of homes at some stage of the foreclosure process and completed foreclosures reflect the total number of homes lost to foreclosure.

Since the financial meltdown began in September 2008, there have been approximately 6.4 million completed foreclosures nationally. Since homeownership rates peaked in the second quarter of 2004, there have been approximately 8.5 million homes lost to foreclosure.

As of last August, the national foreclosure inventory included approximately 351,000, or 0.9%, of all homes with a mortgage. A year earlier, it was 499,000 homes, or 1.3%.

The August 2016 foreclosure inventory rate is the lowest it’s been since July 2007.

“With the foreclosure inventory now under 1% nationally, the need to boost single-family housing stocks through new construction will become more acute in the coming months and years,” said Anand Nallathambi, president and CEO of CoreLogic.

Mortgage delinquencies

In addition, CoreLogic reports the number of mortgages in serious delinquency was down 20.6% from August 2015, with 1.1 million mortgages, or 2.8%, being the lowest level since September 2007.

The decline was broad-based with decreases in serious delinquency in 48 states and the District of Columbia.

Report highlights

• On a month-over-month basis, completed foreclosures increased by 7.7% to 37,000 in August from the 34,000 reported for the previous month. As a basis of comparison, before the decline in the housing market in 2007, completed foreclosures averaged 21,000 per month nationwide between 2000 and 2006.
• On a month-over-month basis, the August foreclosure inventory was down 3.2% from July.
• The five states with the highest number of completed foreclosures in the 12 months ending in August were Florida (55,000), Texas (27,000), Ohio (23,000), California (22,000), and Georgia (21,000).These five states account for about 35% of completed foreclosures nationally.
• Four states and the District of Columbia had the lowest number of completed foreclosures in the 12 months ending in August 2016: the District of Columbia (212), North Dakota (341), West Virginia (469), Alaska (624), and Montana (717).
• Four states and the District of Columbia had the highest foreclosure inventory rate in August 2016: New Jersey (3.2%), New York (2.9%), Maine (1.8%), Hawaii (1.8%), and the District of Columbia (1.8%).
• The five states with the lowest foreclosure inventory rate in August 2016 were Colorado, Minnesota, Arizona, Utah, and Michigan -- all at 0.3%.

The number of homes at some stage of the foreclosure process -- the foreclosure inventory -- was down in July, as was the number of completed foreclosures, which reflects the total number of homes lost to foreclosure.

Property information provider CoreLogic reports last month's inventory plunged 29.1% and completed foreclosures declined by 16.5% compared with July 2015. The latter translates to a year-over-year decline from 41,000 in July 2015 to 34,000 in July 2016, representing a decrease of 71.2% from the peak of 118,009 in September 2010.

Since the start of the financial meltdown in September 2008, there have been approximately 6.4 million completed foreclosures nationally, and since homeownership rates peaked in the second quarter of 2004, there have been approximately 8.5 million homes lost to foreclosure.

As of this past July, the national foreclosure inventory included approximately 355,000, or 0.9%, of all homes with a mortgage versus 501,000 homes, or 1.3%, in July 2015. The latest July foreclosure inventory rate is the lowest for any month since August 2007.

"Loan modifications, foreclosures and stronger housing and labor markets have each played a role in bringing the foreclosure rate to the lowest level in nine years," said CoreLogic Chief Economist Dr. Frank Nothaft. "The U.S. Treasury's Making Home Affordable program has contributed to the decline through permanent modifications, forbearance and foreclosure alternatives which have assisted 2.5 million homeowners with first mortgages at risk of foreclosure since 2009."

CoreLogic also reports that the number of mortgages in serious delinquency -- 90 days or more past due including loans in foreclosure or REO -- were down 17.3% from July 2015 to July 2016, with 1.1 million mortgages, or 2.9%, in this category. The decline was broad-based, with declines in 47 states and the District of Columbia.

Report highlights

• On a month-over-month basis, completed foreclosures decreased by 6.8% to 34,000 in July 2016 from the 36,000 reported for June 2016. As a basis of comparison, before the decline in the housing market in 2007, completed foreclosures averaged 21,000 per month nationwide between 2000 and 2006.
• On a month-over-month basis, the foreclosure inventory was down 3.9% from June.
• The five states with the highest number of completed foreclosures in the 12 months ending in July 2016 were Florida (57,000), Michigan (45,000), Texas (27,000), Ohio (23,000), and California (21,000). These five states account for almost 40% of all completed foreclosures nationally.
• Four states and the District of Columbia had the lowest number of completed foreclosures: DC (207), North Dakota (324), West Virginia (488), Alaska (635), and Montana (700).
• Four states and the District of Columbia had the highest foreclosure inventory rate: New Jersey (3.3%), New York (3%), Hawaii (1.8%), Maine (1.8%), and the District of Columbia (1.8%).
• The five states with the lowest foreclosure inventory rate were Colorado, Minnesota, Utah, Arizona, and Alaska -- all at 0.3%.

The nation continues to crawl out of the hole created by the previous decade's housing meltdown.

Property information provider CoreLogic reports the foreclosure inventory plunged 25.9% in June from the same time last year, while completed foreclosures were down 4.9%. The number of completed foreclosures as of this past June (38,000) represents a decline of 67.5% from the peak (117,835) in September 2010.

Since the bottom fell out in September 2008, there have been approximately 6.3 million completed foreclosures nationally, with approximately 8.4 million homes lost to foreclosure since homeownership rates peaked in the second quarter of 2004.

Roughly 375,000, or 1.0%, of all homes with a mortgage were in some stage of the foreclosure process in June, putting the foreclosure inventory rate at the lowest point for any month since August 2007.

Serious delinquencies

In addition, the number of mortgages in serious delinquency -- 90 days or more past due including loans in foreclosure or REO -- posted a year-over-year decline of 21.3% in June, for a rate of 2.8%, the lowest in nearly nine years.

“Mortgage loan performance depends on the economic health of local markets, with varied differences even within a state,” said CoreLogic Chief Economist Dr. Frank Nothaft. “Within Texas, the serious delinquency rate in the Dallas metropolitan area has fallen by 0.5% from a year earlier, as home prices and employment have continued to rise. The rate in the Midland area, on the other hand, has jumped 0.5%, reflecting the weakness in oil production and job loss over the past year.”

Report highlights

• On a month-over-month basis, completed foreclosures rose 5.1% to 38,000 in June 2016 from a year earlier. As a basis of comparison, before the decline in the housing market in 2007, completed foreclosures averaged 21,000 per month nationwide between 2000 and 2006.
• On a month-over-month basis, the foreclosure inventory was down 3.6%.
• The five states with the highest number of completed foreclosures in the 12 months ending in June were Florida (60,000), Michigan (47,000), Texas (27,000), Ohio (23,000), and California (22,000). These five states account for almost 40% of all completed foreclosures nationally.
• Four states and the District of Columbia had the lowest number of completed foreclosures: The District of Columbia (179), North Dakota (321), West Virginia (487), Alaska (639), and Montana (675).
• Four states and the District of Columbia had the highest foreclosure inventory rate: New Jersey (3.4%), New York (3.1%), the District of Columbia (2%), Hawaii (2%), and Maine (1.9%).
• The five states with the lowest foreclosure inventory rate were Colorado (0.3%), Michigan (0.3%), Minnesota (0.3%), Nebraska (0.3%), and Utah (0.3%).

The inventory of foreclosed homes fell sharply during May according to the CoreLogic National Foreclosure Report.

The property information provider says the number of homes at some stage of the foreclosure process was down 24.5% from the same month a year ago, while completed foreclosures fell by 6.9% year-over-year.

The decline in completed foreclosures nationwide works out to 38,000 last May from 41,000 in May 2015. That represents a drop of 67.9% from the peak of 117,813 in September 2010.

Since the financial meltdown began in September 2008, there have been approximately 6.3 million completed foreclosures nationally, and since homeownership rates peaked in the second quarter of 2004, there have been approximately 8.3 million homes lost to foreclosure.

"The foreclosure rate fell to 1% in May, which is twice the long-term average of 0.5%. However, this masks the underlying progress at the state level," said Dr. Frank Nothaft, chief economist for CoreLogic. "Twenty-nine states had foreclosure rates below the national average, and all but North Dakota experienced declines in their foreclosure rate compared to the prior year."

Mortgage delinquencies

CoreLogic also reports the number of mortgages in serious delinquency (defined as 90 days or more past due including loans in foreclosure or Real Estate Owned) declined by 21.6% from May 2015 to May 2016, with 1.1 million mortgages, or 2.8%, in this category. The May 2016 serious delinquency rate is the lowest since October 2007.

"Delinquency and foreclosure rates continue to drop as we experience the benefits of a combination of tight underwriting, job and income growth and a steady rise in home prices,” said CoreLogic President and CEO Anand Nallathambi. “We expect these factors to remain in place for the remainder of this year and for delinquency and foreclosure rates to decline even further."

Report highlights

• On a month-over-month basis, completed foreclosures increased by 5.5% to 38,000 in May 2016 from April. As a basis of comparison, before the decline in the housing market in 2007, completed foreclosures averaged 21,000 per month nationwide between 2000 and 2006.
• On a month-over-month basis, the foreclosure inventory was down 3.0%.
• The five states with the highest number of completed foreclosures were Florida (63,000), Michigan (45,000), Texas (27,000), Ohio (23,000), and California (23,000).These five states account for almost half of all completed foreclosures nationally.
• Four states and the District of Columbia had the lowest number of completed foreclosures: the District of Columbia (139), North Dakota (323), West Virginia (494), Alaska (648) and Montana (690).
• Four states and the District of Columbia had the highest foreclosure inventory rate: New Jersey (3.6%), New York (3.2%), Hawaii (2.1%), the District of Columbia (2.0%), and Maine (1.9%).
• The five states with the lowest foreclosure inventory rate were Alaska (0.3%), Arizona (0.3%), Colorado (0.3%), Minnesota (0.3%), and Utah (0.3%).

Global property information provider CoreLogic reports completed foreclosures across the country fell 15.8% in April -- to 37,000 from 43,000 a year earlier. Since the peak of 117,813 in September 2010, completed foreclosures are down 68.9%.

In addition, the foreclosure inventory was down 23.4% from April 2015. Completed foreclosures reflect the total number of homes lost to foreclosure, while the foreclosure inventory represents the number of homes at some stage of the foreclosure process.

Since the financial meltdown began in September 2008, there have been approximately 6.2 million completed foreclosures nationally, and since homeownership rates peaked in the second quarter of 2004, there have been approximately 8.3 million homes lost to foreclosure.

As of this past April, the national foreclosure inventory included approximately 406,000, or 1.1% percent, of all homes with a mortgage. A year earlier, it was 530,000 homes, or 1.4%. The April 2016 foreclosure inventory rate is the lowest for any month since September 2007.

Serious deliquencies

The number of mortgages in serious delinquency -- 90 days or more past due including loans in foreclosure or Real Estate Owned -- dropped 21.6% from April 2015 to April 2016, with 1.1 million mortgages, or 3%, in this category. The April 2016 serious delinquency rate is the lowest since October 2007.

“The recovery in home prices and improved labor market have contributed to the drop in seriously delinquent rates,” said Dr. Frank Nothaft, chief economist for CoreLogic. “Over the 12 months through April, the CoreLogic Home Price Index for the U.S. rose 6.2 % and the labor market gained 2.6 million jobs. We also found that the seriously delinquent rate fell by about three-quarters of a percentage point.”

Report highlights

• On a month-over-month basis, completed foreclosures rose 0.3% to 37,000 in April. As a basis of comparison, before the decline in the housing market in 2007, completed foreclosures averaged 21,000 per month nationwide between 2000 and 2006.
• On a month-over-month basis, the foreclosure inventory was down 3% compared with March 2016.
• The five states with the highest number of completed foreclosures for the 12 months ending in March 2016 were Florida (69,000), Michigan (48,000), Texas (28,000), Georgia (23,000), and California (23,000). These five accounted for about 41% of all completed foreclosures nationally.
• Four states and the District of Columbia had the lowest number of completed foreclosures: The District of Columbia (128), North Dakota (317), West Virginia (482), Alaska (653), and Montana (695).
• Four states and the District of Columbia had the highest foreclosure inventory rate: New Jersey (3.7%), New York (3.2%), Hawaii (2.2%), the District of Columbia (2.1%), and Florida (2%).
• The five states with the lowest foreclosure inventory rate were Alaska (0.3%), Minnesota (0.3%), Utah (0.4%, Arizona (0.4%), and Colorado (0.4%).

The number of completed foreclosures and the foreclosure inventory were lower in March from the same month in 2015.

Property information, analytics and data-enabled services provider CoreLogic reports completed foreclosures fell 14.9% from March 2015, and are down 69.7% from the peak in September 2010.

The foreclosure inventory, which represents the number of homes at some stage of the foreclosure process, dropped 23.2% from the same time a year ago.

On a month-over-month basis, completed foreclosures rose 9.3% from February, while inventories were down 2.2%.

Since the financial meltdown began in September 2008, there have been approximately 6.2 million completed foreclosures nationally; and since home-ownership rates peaked in the second quarter of 2004, there have been approximately 8.2 million homes lost to foreclosure.

Report highlights

• The five states with the highest number of completed foreclosures for the 12 months ending in March 2016 were Florida (69,000), Michigan (48,000), Texas (28,000), Georgia (23,000), and California (23,000). These five states accounted for about 41% of all completed foreclosures nationally.
• Four states and the District of Columbia had the lowest number of completed foreclosures for the 12 months ending in March 2016: The District of Columbia (114), North Dakota (311), West Virginia (541), Wyoming (634), and Alaska (644).
• Four states and the District of Columbia had the highest foreclosure inventory as a percentage of all mortgaged homes in March 2016: New Jersey (4.0%), New York (3.3%, Hawaii (2.3%), the District of Columbia (2.2%), and Florida (2.1%).
• The five states with the lowest foreclosure inventory rate in March 2016 were Alaska (0.3%), Minnesota (0.4%), Arizona (0.4%), Colorado (0.4%), and Utah (0.4%).

The housing crisis has been over for years, but millions of homeowners are still underwater on their mortgages and many of them are struggling to make payments.

The government's previous mortgage modification efforts produced questionable results, but now the Federal Housing Finance Agency (FHFA), the main regulator of Fannie Mae and Freddie Mac, will help some “seriously delinquent” underwater homeowners to avoid foreclosure.

The FHFA has announced it will allow Fannie and Freddie to reduce the amount owed on some mortgages, a move estimated to provide relief to about 33,000 homeowners.

The agency says it is a one-time offer for borrowers who have Fannie or Freddie-backed mortgages and who meet specific eligibility criteria. They must be owner-occupants who were at least 90 days delinquent on their mortgages on March 1.

Additionally, the outstanding balance on the mortgage must be no more than $250,000.

Could help both families and communities

Mike Calhoun, President of the Center for Responsible Lending, said the action has the potential to help both struggling families and hard-hit communities.

“The new program recognizes the value of principal reduction as an important tool that helps to keep families in their homes and reduces the cost of foreclosures,” Calhoun said in a statement emailed to ConsumerAffairs. “Up until now, this effective loan modification tool was not available to homeowners whose mortgages are owned by Fannie Mae and Freddie Mac.”

Early loan modification efforts often left struggling homeowners frustrated by loan servicers' repeated requests for the same documents. In many cases, by the time homeowners had gathered all the requested material, their homes were in foreclosure. Rarely, if ever, did a modification include a reduction in principal on a loan.

Still a problem

FHFA Director Melvin L. Watt expects it to be different this time, noting that while the national housing market appears to have recovered, negative equity remains a real problem.

"The Principal Reduction Modification program we are announcing today, along with the changes we are making to our NPL sales guidelines, will allow an opportunity for delinquent, underwater borrowers in these areas to avoid foreclosure and save their homes," he said in a release.

While 33,000 homeowners may get relief under the new modification program, it is the tip of a very large iceberg. A recent report by Zillow found more than more than six million homeowners are still underwater on their mortgages, making up 13.1% of homeowners with a mortgage. More than 820,000 homeowners still owe over twice as much on their mortgages as their homes are worth.

The latest National Foreclosure Report from CoreLogic shows completed foreclosures posted a year-over-year decline of 22.6% in December -- from 41,000 to 32,000 -- and are down 72.8% from their September 2010 peak of 117,722.

In addition, the property information, analytics, and data-enabled services provider reports the foreclosure inventory that same month dropped 23.8%. The foreclosure inventory represents the number of homes at some stage of the foreclosure process and completed foreclosures reflect the total number of homes lost to foreclosure.

Since the beginning of the financial meltdown in September 2008, there have been approximately 6.1 million completed foreclosures across the country. And since homeownership rates peaked in the second quarter of 2004, there have been about 8 million homes lost to foreclosure.

As of this past December, the national foreclosure inventory included approximately 433,000, or 1.1%, of all homes with a mortgage, compared with 568,000 homes, or 1.5% the year before. The December 2015 foreclosure inventory rate is the lowest for any month since November 2007.

“Reflecting on the full-year foreclosure results for 2015, we can see that completed foreclosures are down more than 20% for the year, which is the lowest level since 2006, before the crisis,” said Dr. Frank Nothaft, chief economist for CoreLogic. “Maryland, which can be described as a suburb of the solid D.C. market, led the way with a 59% decline in foreclosures in 2015.”

CoreLogic also reports that the number of mortgages in serious delinquency (defined as 90 days or more past due, including loans in foreclosure or real estate owned) declined by 23.3% from December 2014 to December 2015, with 1.2 million mortgages, or 3.2%, in this category. The December 2015 serious delinquency rate is the lowest in eight years.

“The supply of distressed inventory continues to shrink rapidly. While this is positive for the housing market overall, it also drives a decline in the inventory of affordable for-sale homes,” said Anand Nallathambi, president and CEO of CoreLogic. “The lack of housing stock, particularly affordable inventory, is a growing issue and will limit a full housing recovery in the short to medium term.”

Report highlights:

• On a month-over-month basis, completed foreclosures declined by 5.6% to 32,000 in December 2015 from the 34,000 reported in November 2015. As a basis of comparison, before the decline in the housing market in 2007, completed foreclosures averaged 21,000 per month nationwide between 2000 and 2006.
• The five states with the highest number of completed foreclosures for the 12 months ending in December 2015 were Florida (79,000), Michigan (50,000), Texas (30,000), Ohio (24,000), and Georgia (24,000). These five states accounted for almost half of all completed foreclosures nationally.
• Four states and the District of Columbia had the lowest number of completed foreclosures for the 12 months ending in December 2015: the District of Columbia (81), North Dakota (220), Wyoming (541), West Virginia (560), and Alaska (700).
• Four states and the District of Columbia had the highest foreclosure inventory rate in December 2015: New Jersey (4.2%), New York (3.5%), Hawaii (2.4%), the District of Columbia (2.3%), and Florida (2.3%).
• The five states with the lowest foreclosure inventory rate in December 2015 were Alaska (0.3%), Minnesota (0.3%), Colorado (0.4%), Arizona (0.4%), and Utah (0.4%).

HSBC Bank will be paying $470 million to settle charges that it mishandled mortgage origination, servicing, and foreclosure duties, with much of the money going to consumers who lost their homes or suffered other adverse outcomes because of HSBC's actions.

The agreement was reached by a joint federal-state task force including the U.S. Justice Department, the Department of Housing and Urban Development (HUD), and the Consumer Financial Protection Bureau, along with 49 state attorneys general and the District of Columbia’s attorney general.

“This agreement is the result of a coordinated effort between federal and state partners to hold HSBC accountable for abusive mortgage practices,” 

“This agreement provides for $370 million in creditable consumer relief to benefit homeowners across the country and requires HSBC to reform their servicing standards," said Acting Associate Attorney General Stuart F. Delery. "The Department of Justice remains committed to rooting out financial fraud and holding bad actors accountable for their actions.”  

“This agreement not only provides relief to borrowers affected by HSBC’s past practices, it puts in place protections for current and future homeowners through tough mortgage servicing standards,” said Iowa Attorney General Tom Miller.  “For years we’ve worked together to hold mortgage servicers responsible for their past conduct.  We’re doing that here through this settlement and we’ll continue to address bad conduct in the future.”

Consumer relief

Under the agreement announced today, HSBC has agreed to provide more than $470 million in relief to consumers and payments to federal and state parties, including: 

• HSBC will pay $100 million: $40.5 million to be paid to the settling federal parties; $59.3 million to be paid into an escrow fund administered by the states to make payments to borrowers who lost their homes to foreclosure between 2008 and 2012; and $200,000 to be paid into an escrow fund to reimburse the state attorneys general for investigation costs.
• By July 2016, HSBC will complete $370 million in creditable consumer relief directly to borrowers and homeowners in the form of reducing the principal on mortgages for borrowers who are at risk of default, reducing mortgage interest rates, forgiving forbearance, and other forms of relief.  
• HSBC will be required to implement standards for the servicing of mortgage loans, the handling of foreclosures, and for ensuring the accuracy of information provided in federal bankruptcy court.

What to do

Eligible borrowers will be contacted about how to qualify for payments. The HSBC agreement requires the company to provide certain borrowers with loan modifications or other relief. The modifications include principal reductions and refinancing for underwater mortgages. 

Hundreds of thousands of borrowers whose loans were serviced by HSBC and who lost their home to foreclosure from January 1, 2008 through December 31, 2012 and encountered servicing abuse will be eligible for a payment from the national $59.3 million fund for payments to borrowers. The borrower payment amount will depend on how many borrowers file claims.

The settlement requires HSBC to substantially change how it services mortgage loans, handles foreclosures, and ensures the accuracy of information provided in federal bankruptcy court.

The terms will prevent past foreclosure abuses, such as robo-signing, improper documentation, and lost paperwork.

“There has to be one set of rules for everyone, no matter how rich or how powerful, and that includes lenders who engage in abusive business practices,” said New York Attorney General Eric T. Schneiderman. “The settlement announced today is a joint partnership that will create tough new servicing standards that will ensure fair treatment for HSBC’s borrowers and provide relief to customers across New York State and across the country.”

The number of homes in foreclosure, as well as completed foreclosures, fell again in November.

Property information, analytics, and services provider CoreLogic reports the foreclosure inventory dropped by 21.8%, while completed foreclosures were down by 18.8% compared with November 2014.

In terms of numbers of homes, completed foreclosures nationwide decreased year-over-year from 41,000 in November 2014 to 33,000 in November 2015. The number of completed foreclosures in November 2015 was down 71.6% from the peak of 117,657 in September 2010.

The foreclosure inventory represents the number of homes at some stage of the foreclosure process; completed foreclosures reflect the total number of homes lost to foreclosure.

"Remarkable improvement"

Since the September 2008 beginning of the financial meltdown, there have been approximately 6 million completed foreclosures across the country. Since homeownership rates peaked in the second quarter of 2004, there have been about 8 million homes lost to foreclosure.

As of this past November, the national foreclosure inventory included approximately 448,000, or 1.2%, of all homes with a mortgage compared with 573,000 homes, or 1.5%, a year earlier. The November 2015 foreclosure inventory rate is the lowest for any month since November 2007.

“After peaking at 3.6% in January 2011, the foreclosure rate currently stands at 1.2% -- a remarkable improvement,” said Dr. Frank Nothaft, chief economist for CoreLogic. “While there are still pockets of areas with high foreclosure activity, 30 states have foreclosure rates below the national average which is evidence of the solid improvement.”

The number of mortgages in serious delinquency (defined as 90 days or more past due, including loans in foreclosure or Real Estate Owned) declined by 21.7% from November 2014 to November 2015, with 1.3 million mortgages, or 3.3%, in this category. That's the lowest rate since December 2007.

Report highlights

• On a month-over-month basis, completed foreclosures decreased by 10.9% to 33,000 in November from the 38,000 reported in October. As a basis of comparison, before the decline in the housing market in 2007, completed foreclosures averaged 21,000 per month nationwide between 2000 and 2006.
• The five states with the highest number of completed foreclosures for the 12 months ending in November were Florida (83,000), Michigan (51,000), Texas (29,000), California (24,000), and Georgia (24,000). These five states accounted for almost half of all completed foreclosures nationally.
• Four states and the District of Columbia had the lowest number of completed foreclosures for the 12 months ending in November 2015: the District of Columbia (78), North Dakota (225), Wyoming (543), West Virginia (565), and Hawaii (686).
• Four states and the District of Columbia had the highest foreclosure inventory rate in November 2015: New Jersey (4.4%), New York (3.5%), Hawaii (2.5%), Florida (2.4%), and the District of Columbia (2.4%).
• The five states with the lowest foreclosure inventory rate in November 2015 were Alaska (0.3%), Minnesota (0.3%), Arizona (0.4%), Colorado (0.4%), and Utah (0.4%).

Both completed foreclosures and the foreclosure inventory fell during October.

CoreLogic, a property information, analytics, and services provider reports the number of completed foreclosures nationwide decreased year over year from 51,000 in October 2014 to 37,000 in October 2015. That's a drop of 27.1% and a decline of 68.2% from the peak of 117,543 in September 2010. In addition, the foreclosure inventory declined by 21.5 percent.

Completed foreclosures reflect the total number of homes actually lost to foreclosure. The foreclosure inventory is the share of all homes at some stage of the foreclosure process, and completed foreclosures reflect the total number of homes actually lost to foreclosure.

Since the financial meltdown began in September 2008, there have been approximately 6 million completed foreclosures across the country, and since homeownership rates peaked in the second quarter of 2004, there have been about 8 million homes lost to foreclosure.

Lowest foreclosure rate in eight years

As of October 2015, the national foreclosure inventory included approximately 463,000, or 1.2% of all homes with a mortgage compared with 589,000 homes, or 1.5%, in October 2014. This is lowest rate since November 2007.

“Improved economic conditions and more foreclosure completions have pushed the foreclosure rate lower,” said Dr. Frank Nothaft, chief economist for CoreLogic. “The national unemployment rate declined to 5.0% in October, the lowest since December 2007, and the CoreLogic national Home Price Index has risen 37% from its trough.”

CoreLogic also reports that the number of mortgages in serious delinquency (90 days or more past due), including those loans in foreclosure or Real Estate Owned declined by 19.7% from October 2014 to October 2015, with 1.3 million mortgages, or 3.4%, in this category. This is the lowest serious delinquency rate since December 2007.

“We are heading into 2016 with the lowest foreclosure inventory in eight years thanks to escalating home values and progressive improvement in the U.S. economy. A large proportion of the remaining foreclosure inventory is clustered in New York, New Jersey and Florida,” said Anand Nallathambi, president and CEO of CoreLogic. “Equally encouraging is the drop in mortgage delinquency rates reflecting the stronger labor market and tighter underwriting since 2009.”

Report highlights

• On a month-over-month basis, completed foreclosures fell by 12.3% to 37,000 from the 43,000 reported in September 2015. As a basis of comparison, before the decline in the housing market in 2007, completed foreclosures averaged 21,000 per month nationwide between 2000 and 2006.
• The five states with the highest number of completed foreclosures for the 12 months ending in October 2015 were Florida (86,000), Michigan (59,000), Texas (30,000), Georgia (25,000), and California (24,000).These five states accounted for almost half of all completed foreclosures nationally.
• Four states and the District of Columbia had the lowest number of completed foreclosures for the 12 months ending in October 2015: the District of Columbia (76), North Dakota (239), Wyoming (515), West Virginia (571), and Hawaii (700).
• Four states and the District of Columbia had the highest foreclosure inventory rate in October 2015: New Jersey (4.5%), New York (3.6%), Hawaii (2.5%), Florida (2.5%), and the District of Columbia (2.3%).
• The five states with the lowest foreclosure inventory rate in October 2015 were Alaska, Arizona, Minnesota, North Dakota, and Colorado -- all at 0.4%.

Foreclosures of homes across the nation continued to tail off during September.

According to CoreLogic, a property information, analytics, and data-enabled services provider, the foreclosure inventory declined by 24.3% and completed foreclosures were down 17.6% from the same time a year ago.

The National Foreclosure Report also shows the number of foreclosures nationwide decreased year-over-year from 67,000 in September 2014 to 55,000 this past September. The number of completed foreclosures in September 2015 is a drop of 52.8% from the peak of 117,438 in September 2010.

Completed foreclosures reflect the total number of homes lost to foreclosure. Since the financial meltdown began in September 2008, there have been approximately 6 million completed foreclosures across the country; and since homeownership rates peaked in the second quarter of 2004, there have been about 8 million homes lost to foreclosure.

As of this past September, the national foreclosure inventory included approximately 470,000, or 1.2%, of all homes with a mortgage compared with 621,000 homes, or 1.6 percent, in September of last year.

“The largest improvements in the foreclosure inventory continue to be in judicial states on the East Coast such as Florida and New Jersey,” said Sam Khater, deputy chief economist for CoreLogic. “While the overwhelming majority of states are experiencing declines in their foreclosure rates, four states experienced small increases compared with a year ago.”

CoreLogic also reports that the number of mortgages in serious delinquency (defined as 90 days or more past due, including those loans in foreclosure or REO) declined by 21.2% from September 2014 to September 2015 with 1.3 million mortgages, or 3.4%, in this category.

This is the lowest serious delinquency rate since December 2007. The foreclosure rate (defined as the share of all loans in the foreclosure process) was at 1.2% as of September, which is back to the December 2007 level.

“The rate of delinquencies continues to drop back closer to historic norms powered by improved economic conditions and tighter post-recession underwriting standards,” said Anand Nallathambi, president and CEO of CoreLogic. “As we head into 2016, based on almost every major metric, the fundamentals underpinning the housing market are healthier than any time since 2007.”

Report highlights

• On a month-over-month basis, completed foreclosures increased by 49.5% to 55,000 from the 37,000 reported in August 2015. The one-month surge in foreclosures was partially the result of an annual public auctioning of thousands of tax-foreclosed properties in Wayne County, Mich., of which Detroit is the county seat. As a basis of comparison, before the decline in the housing market in 2007, completed foreclosures averaged 21,000 per month nationwide between 2000 and 2006.
• The five states with the highest number of completed foreclosures for the 12 months ending in September 2015 were: Florida (91,000), Michigan (45,000), Texas (32,000), Georgia (26,000) and California (26,000). These five states accounted for almost half of all completed foreclosures nationally.
• Four states and the District of Columbia had the lowest number of completed foreclosures for the 12 months ending in September 2015: District of Columbia (69), North Dakota (310), Wyoming (498), West Virginia (593) and Hawaii (690).
• Four states and the District of Columbia had the highest foreclosure inventory rate in September 2015: New Jersey (4.6%), New York (3.7%), Florida (2.6%), Hawaii (2.5%) and the District of Columbia (2.4%).
• The five states with the lowest foreclosure inventory rate in September 2015 were: Alaska (0.3%), Minnesota (0.4%), Nebraska (0.4%), Arizona (0.4%) and North Dakota (0.4%).

Foreclosure activity in the third quarter rose 3% from 2014, according to foreclosure marketing website RealtyTrac. Most of that activity came in the form of bank repossessions, which spiked 66% year-over-year.

On the surface that might look like trouble, but it probably isn't. The increased activity isn't caused by new problems in the housing market but is a hangover from the housing crises.

Homes lost by people three to five years ago, many of them vacant for years, are finally being seized and put on the market. According to RealtyTrac, here is the key statistic:

A total of 133,811 U.S. properties started the foreclosure process in the third quarter, down 12% from the previous quarter and down 14% from a year ago to the lowest level since the third quarter of 2005.

Back to normal

In other words, we are very close to getting back to normal when it comes to homeowners being able to manage their mortgage payments.

“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. 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.”

But in states where there is a flood of distressed homes finally hitting Multiple Listings, there should be a significant impact on the housing market – good for buyers, not so good for sellers.

When foreclosed homes are finally put up for sale, they have often sat empty for years. There may be cosmetic and even structural degradation. That tends to pull down its asking price as well as surrounding property values.

However, it can be a great benefit for buyers. It not only provides a lower entry price into the market, it vastly increases the supply of homes they have to choose from.

Most-affected states

Here are some markets that may be most affected:

• New Jersey: Foreclosure activity was up 27%, boosting the state’s foreclosure rate to the nation’s highest. One in every 171 housing units received a foreclosure filing during the quarter — more than twice the national average. Most of the activity was centered in Atlantic City.
• Florida: Foreclosure activity dropped 17% from a year ago, but the state still posted the nation’s second highest foreclosure rate. One in every 186 housing units had a foreclosure filing. Data suggests that the Florida housing market is on the mend.
• Nevada: Foreclosure activity jumped 13%, with the third highest foreclosure rate in the nation. One in every 194 housing units had a foreclosure filing. But like Florida, the trend is moving in the right direction. Foreclosure stats dropped 14%.
• Maryland: Foreclosure activity was down year-over-year, but the state has a large share of repossessed homes finally hitting the market.

“We are anticipating a continued slowdown in foreclosure activity across the state in the fourth quarter,” said Michael Mahon, president at HER Realtors, covering the Cincinnati, Dayton, and Columbus markets in Ohio. “While the lower number of foreclosures is a good reflection of the growing economy and jobs across Ohio, less foreclosure activity will help lender servicers to provide quicker action on pending foreclosure accounts into their REO portfolios.”

A shortage of homes for sale in many markets has distorted prices, artificially boosting home prices. In regions where repossessed homes are finally hitting the market, prices could moderate significantly.

Nearly 1,500 additional members of the armed services have been identified as being eligible for more than $186 million in reimbursements that ignored the legal protections of the Servicemembers Civil Relief Act (SCRA), the Justice Department announced.

Together with other compensation announced in February, a total of 2,413 service members and their co-borrowers are eligible to receive over $311 million.  The five mortgage servicers are

• JP Morgan Chase Bank N.A. (JP Morgan Chase);
• Wells Fargo Bank N.A. and Wells Fargo & Co. (Wells Fargo);
• Citi Residential Lending Inc., Citibank, NA and CitiMortgage Inc. (Citi);
• GMAC Mortgage LLC, Ally Financial Inc. and Residential Capital LLC (GMAC Mortgage); and
• Bank of America N.A., Countrywide Home Loans Inc., Countrywide Financial Corp., Countrywide Home Loans Servicing L.P. and BAC Home Loans Servicing L.P. (Bank of America).

The compensation results from the SCRA portion of the 2012 settlement known as the National Mortgage Settlement (NMS) and an earlier settlement with Bank of America. It takes into account foreclosures that took place between Jan. 1, 2006, and Apr. 4, 2012, where the servicer obtained a foreclosure without a judicial proceeding or where the servicer obtained a default foreclosure judgment without filing a proper affidavit with the court stating that the service member was in military service.

“While this compensation will provide some financial relief to more than 2,400 service members and their families, the fact is no one serving our country in the Armed Forces should ever have to worry about losing their home to an illegal foreclosure,” said Acting Associate Attorney General Stuart F. Delery. 

$125,000 plus

For mortgages serviced by Bank of America, Wells Fargo, Citi, and GMAC Mortgage, the identified service members will each receive $125,000, plus any lost equity in the property and interest on that equity.  Eligible co-borrowers will also be compensated for their share of any lost equity in the property. 

To ensure consistency with an earlier private settlement, JP Morgan Chase will provide any identified service member either the property free and clear of any debt or the cash equivalent of the full value of the home at the time of sale. They will also have the opportunity to submit a claim for compensation for any additional harm suffered, which will be determined by a special consultant, retired U.S. District Court Judge Edward N. Cahn. 

Payment amounts have been reduced for those service members or co-borrowers who have previously received compensation directly from the servicer or through a prior settlement, such as the independent foreclosure review conducted by the Office of the Comptroller of the Currency and the Federal Reserve Board.

The following chart shows the number of service members who will be compensated by each of the servicers for both non-judicial and judicial foreclosures:

What to do

Borrowers should use the following contact information for questions about SCRA payments under the National Mortgage Settlement:

• Bank of America borrowers should call Rust Consulting Inc., the settlement administrator, toll-free at 1-855-793-1370 or write to BAC Home Loans Servicing Settlement Administrator, c/o Rust Consulting Inc., P.O. Box 1948, Faribault, MN 55021-6091.
• Citi borrowers should call Citi toll-free at 1-888-326-1166.
• GMAC Mortgage borrowers should call Rust Consulting Inc., the settlement administrator, toll-free at 1-866-708-0915 or write to P.O. Box 3061, Faribault, Minnesota 55021-2661.
• JPMorgan Chase borrowers should call Chase toll-free at 1-877-469-0110 or write to P.O. Box 183224, OH-7160/DOJ, Columbus, Ohio 43219-6009.
• Wells Fargo borrowers should call the Wells Fargo Home Mortgage Military Customer Service Center toll free at 1-877-839-2359.

Service members and their dependents who believe that their SCRA rights have been violated should contact an Armed Forces Legal Assistance office. To find the closest office, consult the military legal assistance office locator at http://legalassistance.law.af.mil and click on the Legal Services Locator.  Additional information about the Justice Department’s enforcement of the SCRA and the other laws protecting service members is available at www.servicemembers.gov.

Consumers continue to face problems with mortgage servicing, according to the Consumer Financial Protection Bureau's (CFPB) latest monthly consumer complaints snapshot

Of particular concern are certain circumstances, such as when consumers apply for a loan modification to avoid foreclosure. As of Sept. 1, 2015 the CFPB has handled over 702,900 complaints across all products.

“Despite strong protections that have been put in place to protect homeowners, this month’s complaint report shows consumers are still having problems when dealing with their mortgages,” said CFPB Director Richard Cordray. “The Bureau will continue to work to make sure that consumers are being treated fairly on their mortgage issues.”

Mortgages

With a total value topping $10 trillion, the mortgage market is the largest consumer financial marketplace in the country. In 2014, the CFPB put in place strong rules that protect consumers throughout the mortgage process -- from taking out the loan to paying it back.

Since the CFPB began accepting consumer complaints in 2011, it has received more mortgage-related complaints than any other type of financial product. As of Sept. 1, the agency had handled approximately 192,500 mortgage-related complaints.

An array of complaints

Some of the findings in the snapshot include:

• Continued problems preventing foreclosure: Over 50% of mortgage complaints have to do with problems consumers face when they are unable to make payments. Consumers complain of delays and a lack of information when applying for a loan modification. Additionally they complain that servicers often move forward with foreclosure proceedings while a modification application is still under review.
• Lack of information when loans are transferred: Consumers report experiencing confusion and frustration about where to make payments when loans are transferred. When the loan transfers occur, consumers say payments often increase unexpectedly. Consumers also say that they do not feel properly informed about their loans being transferred in the first place.
• Trouble making payments: Nearly a third of mortgage complaints came from consumers saying they have trouble making the proper payments on their mortgage loans. Consumers describe companies not accepting payments of anything less than the full balance owed, or finding their payments were not properly applied despite instructions from the consumer.
• Most-complained-about companies: Wells Fargo, Bank of America. and Ocwen were the three companies about which the CFPB has received the most mortgage-related complaints. Between April and June 2015, the three companies averaged around 430 complaints per month.

National complaint overview

As of Sept. 1, 2015, the CFPB has handled 702,900 complaints nationally. Some of the highlights from the statistics in this month’s snapshot report include:

• Complaint volume: For August 2015, the most-complained-about financial product or service was debt collection, representing about 29% of complaints submitted. Of the 25,732 complaints handled in August, approximately 7,582 of them were about debt collection. The second most-complained-about consumer product was credit reporting, accounting for approximately 5,733 complaints. Overall, the CFPB received 972 fewer complaints in August than in July.
• Product trends: In a year-to-year comparison, consumer loan complaints, which include pawn loans, title loans, and installment loans, showed the greatest percentage increase -- 47% -- nearly doubling from the same time last year. Payday loan complaints showed the greatest percentage decrease -- 12% -- over the same three month (June-August) time period between 2014 and 2015, going from 526 complaints in 2014 to 463 complaints in 2015.
• State information: Nebraska and Nevada experienced the greatest complaint volume increases from the same time last year by a considerable margin. The volume of complaints from Nebraska rose by 54%, while Nevada’s complaint volume increased by 45%. The next largest increase was North Carolina, where complaint volume rose by 36% from the same time period last year.
• Most-complained-about companies: The top three companies about which the CFPB received the most complaints was unchanged from last month’s report. From April through June 2015 Equifax, Experian, and Bank of America were the three most-complained-about companies.

Both the number of completed foreclosures and the foreclosure inventory moved lower during July.

According to the CoreLogic National Foreclosure Report, completed foreclosures have declined by 24.4% since July 2014 and the foreclosure inventory was down by 27.9%.

Additionally, the property information, analytics and data-enabled services provider reports number of foreclosures nationwide decreased year-over-year from 50,000 in July 2014 to 38,000 in July 2015, representing a plunge of 67.9% from the peak of 117,225 completed foreclosures in September 2010.

Completed foreclosures are an indication of the total number of homes lost to foreclosure. Since the financial meltdown began in September 2008, there have been approximately 5.8 million completed foreclosures across the country, and since homeownership rates peaked in the second quarter of 2004, there have been approximately 7.8 million homes lost to foreclosure.

“Job market gains and home-price appreciation help to push serious delinquency and foreclosure rates lower. The CoreLogic national Home Price Index (HPI) showed home prices in July rose 6.9% from a year earlier, building equity for homeowners,” said Frank Nothaft, chief economist for CoreLogic. “Further, 2.4 million jobs were created, pushing the unemployment rate down from 6.2% in July 2014 to 5.3% this July and supporting family income growth for most owners.”

As of this past July, the national foreclosure inventory included approximately 469,000, or 1.2%, of all homes with a mortgage compared with 650,000 homes, or 1.7% a year earlier. The July 2015 foreclosure rate is the lowest since December 2007.

The number of mortgages in serious delinquency (defined as 90 days or more past due, including those loans in foreclosure or REO) declined by 23 percent from July 2014 to July 2015 with 1.3 million mortgages, or 3.4 percent, falling into this category. This is the lowest serious delinquency rate since December 2007.

“As we enter the final months of 2015, the housing market continues to gather steam buoyed by improving economic conditions and the release of pent up demand for homeownership,” said Anand Nallathambi, president and CEO of CoreLogic. “The recovery in the housing market is also reflected in declining delinquency and foreclosure rates which, to some degree, reflects the progressive clearing of crisis-era loans and the benefits of tighter underwriting standards over the past six years.”

Report highlights

• On a month-over-month basis, completed foreclosures declined by 6.2% from the 40,000 reported in June 2015. As a basis of comparison, before the decline in the housing market in 2007, completed foreclosures averaged 21,000 per month nationwide between 2000 and 2006.
• The five states with the highest number of completed foreclosures for the 12 months ending in July were Florida (98,000), Michigan (47,000), Texas (33,000), California (27,000) and Georgia (27,000). These five states accounted for almost half of all completed foreclosures nationally.
• Four states and the District of Columbia had the lowest number of completed foreclosures for the 12 months ending in July 2015: South Dakota (33), the District of Columbia (124), North Dakota (316), Wyoming (483) and West Virginia (553).
• Four states and the District of Columbia had the highest foreclosure inventory as a percentage of all mortgaged homes: New Jersey (4.8%), New York (3.7%), Florida (2.7%), Hawaii (2.5%) and the District of Columbia (2.4 percent).
• The five states with the lowest foreclosure inventory rate: Alaska (0.3%), Minnesota (0.4%), North Dakota (0.4%), Utah (0.4%) and Nebraska (0.4%).

Foreclosures were on the decline again in June, according to the CoreLogic National Foreclosure Report.

The provider of property information, analytics and services reports the foreclosure inventory plunged 28.9% and completed foreclosures were down 14.8% on a year-over-year basis.

The number of foreclosures nationwide decreased year over year from 50,000 in June 2014 to 43,000 this past June, representing a slide of 63.3% from the peak of 117,119 completed foreclosures in September 2010.

“The foreclosure rate for the U.S. has dropped to its lowest level since 2007, supported by a continuing decline in loans made before 2009, gains in employment, and higher housing prices,” said Frank Nothaft, chief economist for CoreLogic. “The decline has not been uniform geographically, as the foreclosure rate varies across metropolitan areas.”

Completed foreclosures are an indication of the total number of homes actually lost to foreclosure. Since the financial meltdown began in September 2008, there have been approximately 5.8 million completed foreclosures across the country. Since homeownership rates peaked in the second quarter of 2004, there have been approximately 7.8 million homes lost to foreclosure.

As of June 2015, the national foreclosure inventory included approximately 472,000, or 1.2%, of all homes with a mortgage, compared with 664,000 homes, or 1.7%, in June 2014. The June 2015 foreclosure rate is the lowest since December 2007.

Mortgage delinquencies fall

CoreLogic also reports that the number of mortgages in serious delinquency (defined as 90 days or more past due, including those loans in foreclosure or REO) fell 23.3% from June 2014 to June 2015, with 1.3 million mortgages, or 3.5%, falling into this category. This is the lowest serious delinquency rate since January 2008. On a month-over-month basis, the number of seriously delinquent mortgages declined by 3.4%.

“Serious delinquency is at the lowest level in seven and a half years reflecting the benefits of slow but steady improvements in the economy and rising home prices,” said Anand Nallathambi, president and CEO of CoreLogic. “We are also seeing the positive impact of more stringent underwriting criteria for loans originated since 2009 which has helped to lower the national seriously delinquent rate.”

Report highlights

• On a month-over-month basis, completed foreclosures increased by 4.8% from the 41,000 reported in May 2015. As a basis of comparison, before the decline in the housing market in 2007, completed foreclosures averaged 21,000 per month nationwide between 2000 and 2006.
• The 5 states with the highest number of completed foreclosures for the 12 months ending in June 2015 were: Florida (102,000), Michigan (46,000), Texas (33,000), California (29,000) and Ohio (27,000). These 5 states accounted for almost half of all completed foreclosures nationally.
• Four states and the District of Columbia had the lowest number of completed foreclosures for the 12 months ending in June 2015: South Dakota (32), the District of Columbia (107), North Dakota (313), Wyoming (499) and West Virginia (566).
• Four states and the District of Columbia had the highest foreclosure inventory as a percentage of all mortgaged homes: New Jersey (4.7%), New York (3.7%), Florida (2.7%), Hawaii (2.5%) and the District of Columbia (2.4%).
• The five states with the lowest foreclosure inventory as a percentage of all mortgaged homes were: Alaska (0.3%), Minnesota (0.4%), Montana (0.4%) Nebraska (0.4%) and North Dakota (0.4%).

The inventory of homes in foreclosure plummeted 27.4% in May, while completed foreclosures were down by 19.2% from the same time a year ago, according to the CoreLogic National Foreclosure Report .

Additionally, the provider of property information reports the number of foreclosures nationwide decreased year over year from 51,000 in May 2014 to 41,000 in May 2015, representing a plunge of 64.9% from the peak of completed foreclosures in September 2010.

Completed foreclosures are an indication of the total number of homes actually lost to foreclosure. Since the financial meltdown began in September 2008, there have been approximately 5.7 million completed foreclosures across the country; since home-ownership rates peaked in the second quarter of 2004, there have been approximately 7.8 million homes lost to foreclosure.

As of this past May, the national foreclosure inventory included approximately 491,000, or 1.3%, of all homes with a mortgage compared with 676,000 homes, or 1.7%, in May 2014. This is the lowest foreclosure rate since December 2007.

Serious delinquencies down sharply

CoreLogic also reports that the number of mortgages in serious delinquency (defined as 90 days or more past due, including those loans in foreclosure or REO) fell 22.7% from May 2014 to May 2015, with 1.3 million mortgages, or 3.5%, falling into this category. This is the lowest serious delinquency rate since January 2008. On a month-over-month basis, the number of seriously delinquent mortgages dipped 3.4%.

“With three million jobs created during the past year, the improving labor market has helped more borrowers stay current on their mortgage loan,” said Frank Nothaft, chief economist for CoreLogic. “Because fewer loans are becoming seriously delinquent, the foreclosure inventory has come down to its lowest level in more than seven years, with only 1.3% of loans in foreclosure proceedings.”

Report highlights

• On a month-over-month basis, completed foreclosures increased by 4.1% from the 39,000 reported in April 2015. As a basis of comparison, before the decline in the housing market in 2007, completed foreclosures averaged 21,000 per month nationwide between 2000 and 2006.
• The 5 states with the highest number of completed foreclosures for the 12 months ending in May 2015 were: Florida (104,000), Michigan (46,000), Texas (33,000), California (28,000) and Ohio (27,000). These 5 states accounted for almost half of all completed foreclosures nationally.
• Four states and the District of Columbia had the lowest number of completed foreclosures for the 12 months ending in May 2015: South Dakota (19), District of Columbia (105), North Dakota (326), Wyoming (498) and West Virginia (500).
• Four states and the District of Columbia had the highest foreclosure inventory as a percentage of all mortgaged homes: New Jersey (4.9%), New York (3.7%), Florida (2.9%), Hawaii (2.5%) and District of Columbia (2.4%).
• The 5 states with the lowest foreclosure inventory as a percentage of all mortgaged homes were: Alaska (0.3%), Colorado (0.4%), Minnesota (0.4%), Nebraska (0.4%) and North Dakota (0.4%).

“While the nation’s seriously delinquent rate -- 0 3.5% -- is at its lowest level since January 2008, it remains very high in several big markets,” said Anand Nallathambi, president and CEO of CoreLogic. “The greater New York City region and central Florida continue to have some of the highest serious delinquency rates, almost doubling the national level. Default rates remain elevated in the Chicago and Baltimore metro areas as well.”

Numbers don't lie but at times they can be misleading.

So it is with the May foreclosure report from RealtyTrac, an online marketer of foreclosure properties.

The report shows foreclosure filings, which include default notices, scheduled auctions and bank repossessions (REO), were up 1% in May from April but a more attention-getting 16% over May 2014, a 19-month high.

While that might sound like cause for alarm, Daren Blomquist, vice president at RealtyTrac, says it really isn't. At least, not entirely.

“May foreclosure numbers are a classic good news-bad news scenario, with the number of homeowners starting the foreclosure process stabilizing at pre-housing crisis levels but the number of homeowners actually losing their homes to foreclosure still well above pre-crisis levels and on the rise,” Blomquist said. “Lenders and courts are pushing through stubborn foreclosure cases that have been languishing in foreclosure limbo for years as options to prevent foreclosure are exhausted or left untapped.”

Bank repossessions surge

So many of the foreclosure filings that show up in the May numbers aren't really new. They might have started years ago but became active again last month when the lender took possession of the property. Bank REOs were down slightly from April but up 58% year-over-year.

May's REOs were 56% below the peak of 102,134 REOs in September 2013 but still nearly twice the average monthly number of 23,119 in 2005 and 2006 before the housing bubble burst in August 2006.

But the numbers certainly have significance for people who want to buy or sell a home. If you are trying to sell your home in a neighborhood where several REOs suddenly have come on the market, it could affect how quickly you can sell and what you'll be able to get for your home.

REOs typically sell for well below the market value. Not only will the REOs siphon off potential buyers, their comps set the market price lower in your neighborhood.

Increased inventory

If you are hoping to buy a home, this might help. The market in many areas has suffered from tight inventories, forcing potential buyers to compete for available properties. In areas where REOs are coming on the market, inventories should rise and prices may be less firm.

Real estate varies market to market so the effects of the increase in repossessed homes hitting the market won't be felt evenly across the country. According to the RealtyTrac reports, New Jersey had the biggest rise in REOs at 197%. Bank repossessions were up 116% in New York, 114% in Ohio, 108% in Georgia and 106% in Pennsylvania.

“As available housing inventory begins to increase, we are noticing slight increases in foreclosure activity across Ohio,” said Michael Mahon, president at HER Realtors, which covers the Cincinnati, Dayton and Columbus markets.

Mahon says much of the REO activity in Ohio has occurred for properties under $200,000 – many of them he says triggered by home equity lines of credit coming due and the homeowners being unable to pay.

The Consumer Financial Protection Bureau (CFPB) is accusing RPM Mortgage and its CEO, Erwin Robert Hirt, of illegally paying bonuses and higher commissions to loan originators to get them to steer consumers into costlier mortgages.

In a document filed in federal district court, the CFPB also filed a proposed order that -- if entered by the court – would require RPM to pay $18 million in redress to consumers and a $1 million civil penalty, and would require Hirt to pay an additional $1 million civil penalty.

“RPM rewarded its loan officers for steering consumers into mortgages with higher interest rates,” said CFPB Director Richard Cordray. “Today we are putting an end to RPM’s unlawful practices and holding Robert Hirt personally responsible for his involvement in them.”

A residential-mortgage lender headquartered in California and operator of about 60 branches across 6 states, RPM is accused of instituting a compensation plan that gave loan officers financial incentives to steer consumers into higher-rate mortgage loans. According to the CFPB, RPM provided its loan officers with different forms of compensation that were derived in part from the interest rates of the loans they closed.

Hiding the goods

The company sought to mask this interest-rate-based compensation by filtering it through so-called “employee-expense accounts.” RPM deposited profits from an originator’s closed loans -- profits that were directly tied to the loans’ interest rates -- into an expense account set up for the originator. The expense accounts were used to pay bonuses and higher commissions to its loan originators.

The company also allowed loan originators to tap their expense accounts to offset interest-rate reductions or give credits to certain customers to avoid losing the transactions to competitors. RPM paid or financed millions of dollars in unlawful bonuses, pricing concessions, and supplemental commissions.

The charges

The CFPB found that RPM and Hirt violated the Loan Originator Compensation Rule and the Consumer Financial Protection Act (CFPA) by:

• Funding millions of dollars in illegal bonuses: From April 2011, through January 2012, RPM paid 511 bonuses to its loan originators from their individual employee-expense accounts. The expense-account funds were based in part on the interest rates of the loans the originators closed.
• Paying tens of millions of dollars in higher commissions based on high-interest loans: At the end of 2011, RPM stopped paying bonuses from the employee-expense accounts. Instead, it allowed loan originators to use the employee-expense accounts to supplement their commissions on future transactions. Loan officers were able to reset their commission rates on future loans by using employee-expense account funds to cover the increased costs. In this way, profits from earlier high-interest loans were converted into tens of millions of dollars in commission income.
• Allowing loan officers to use expense accounts to pay for pricing incentives to close new mortgages: From April 2011, through December 2013, RPM allowed loan originators to use their expense accounts to finance thousands of pricing concessions that enabled the loan officers to close and earn commissions on transactions they otherwise would have lost. This “point bank” arrangement allowed loan originators to “bank” profits extracted from certain consumers that enabled them to close on and receive additional compensation from loans to future consumers.

Enforcement action

The CFPB’s proposed consent order, if entered by the court, would require RPM and Hirt to comply with the Loan Originator Compensation Rule and the CFPA and take the following actions:

• Pay $18 million in redress: RPM will pay $18 million in redress to consumers affected by the company’s unlawful compensation practices. The Bureau will notify eligible consumers and send refund checks in the mail.
• Pay $2 million in fines: RPM and Hirt will each pay $1 million to the CFPB’s Civil Penalty Fund.  

More big declines in foreclosures.

CoreLogic reports there were 41,000 completed foreclosures nationwide in March -- down 7,000, or 15.5% from the same month in 2014, representing a plunge of 65.2% from the peak of completed foreclosures in September 2010.

Also in March, the foreclosure inventory declined by 25.7%.

Completed foreclosures are an indication of the total number of homes actually lost to foreclosure. Since the financial meltdown began in September 2008, there have been approximately 5.6 million completed foreclosures across the country, and since homeownership rates peaked in the second quarter of 2004, there have been approximately 7.7 million homes lost to foreclosure.

Declines in delinquency

CoreLogic also reports the number of mortgages in serious delinquency was down 19.1% from March 2014 to March 2015 with 1.5 million mortgages -- or 3.9% -- in serious delinquency. Serious delinquency is defined as 90 days or more past due, including those loans in foreclosure or real estate owned (REO). This is the lowest delinquency rate since May 2008. On a month-over-month basis, the number of seriously delinquent mortgages dipped 1.9%.

As of this past March, the national foreclosure inventory included approximately 542,000 homes, or 1.4%, of all homes with a mortgage compared with 729,000 homes, or 1.9%,the year before, representing a year-over-year decline of 25.7%.

“We are seeing additional improvement in housing market conditions due to a decline in the serious delinquency rate to 3.9%, far below the peak of 8.6% in early 2010,” said Frank Nothaft, chief economist for CoreLogic. “Despite the decline in the number of loans that are 90 days or more delinquent or in foreclosure, the percent of homeowners struggling to keep up is still well above the pre-recession average of 1.5%.”

Report highlights

• On a month-over-month basis, completed foreclosures increased by 7% from the 38,000* reported in February 2015. As a basis of comparison, before the decline in the housing market in 2007, completed foreclosures averaged 21,000 per month nationwide between 2000 and 2006.
• The 5 states with the highest number of completed foreclosures for the 12 months ending in March 2015 were: Florida (110,000), Michigan (50,000), Texas (34,000), Georgia (28,000) and Ohio (28,000). These 5 accounted for almost half of all completed foreclosures nationally.
• Four states and the District of Columbia had the lowest number of completed foreclosures for the 12 months ending in March 2015: South Dakota (16), the District of Columbia (87), North Dakota (326), West Virginia (462) and Wyoming (517).
• On a month-over-month basis, the foreclosure inventory was down by 1.3% from February 2015. The March 2015 foreclosure rate of 1.4% is back to March 2008 levels.
• Four states and the District of Columbia had the highest foreclosure inventory as a percentage of all mortgaged homes: New Jersey (5.3%), New York (3.9%), Florida (3.3%), Hawaii (2.7%) and the District of Columbia (2.5%).
• The 5 states with the lowest foreclosure inventory as a percentage of all mortgaged homes were: Alaska (0.3%), Nebraska (0.4%), North Dakota (0.5%), Montana (0.5%) and Colorado (0.5%).

Fewer homeowners are finding themselves in trouble with their mortgages.

According to the Mortgage Bankers Association's (MBA) National Delinquency Survey, the delinquency rate for mortgage loans on one-to-four-unit residential properties fell to a seasonally adjusted rate of 5.54% of all loans outstanding at the end of the first quarter of 2015 -- the lowest level since the second quarter of 2007.

In addition, the delinquency rate dropped 14 basis points from the previous quarter, and 57 basis points from a year ago.

The delinquency rate includes loans that are at least 1 payment past due but does not include loans in the process of foreclosure. The percentage of loans in the foreclosure process at the end of the first quarter was 2.22%, down five basis points from the fourth quarter of 2014 and 43 basis points lower than the same quarter one year ago. That's the lowest foreclosure inventory rate since the fourth quarter of 2007.

The percentage of loans on which foreclosure actions were started during the first quarter was 0.45%, a dip of 1 basis point from the previous quarter, and unchanged from the first quarter of 2014.

The serious delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 4.24%, down 28 basis points from the previous quarter, and 80 basis points from the first quarter of 2014.

"Delinquency rates and the percentage of loans in foreclosure continued to fall in the first quarter and are now at their lowest levels since 2007," said Joel Kan, MBA's associate vice president of industry surveys and forecasting. "The job market continues to grow, and this is the most important fundamental improving mortgage performance. Additionally, home prices continued to rise, as did the pace of sales, thus increasing equity levels and enabling struggling borrowers to sell if needed."

Change from last quarter

On a seasonally adjusted basis, the overall delinquency rate fell 14 basis points to 5.54%. For prime loans, the delinquency rate was down 7 basis points to 3.18% and for subprime loans the rate plunged 90 basis points to 17.60%. The FHA delinquency rate fell by 63 basis points to 9.10%. VA loans saw the only increase across loans types -- 4 basis points to 5.02% in the first quarter.

Overall foreclosure starts were down 1 basis point to 0.45%. Prime loan foreclosure starts had an increase of 1 basis point to 0.28%, while the foreclosure starts rate for subprime loans fell 34 basis points to 1.39%. For FHA loans, the foreclosure starts rate rose 9 basis points to 0.70%, while the foreclosure starts rate for VA loans inched up 1 basis point to 0.37%.

Year-over-year change

The delinquency rate for all loans -- excluding loans in foreclosure -- dropped 55 basis points from the same quarter a year ago. Prime loans had a 33 basis point decline, while the rate for subprime loans plummeted 214 basis points. The delinquency rates for FHA and VA loans were down 65 basis points and 35 basis points, respectively, over the year.

Compared with the first quarter of 2014, the foreclosure inventory rate for prime loans decreased 37 basis points and the rate for subprime loans fell 110 basis points, while the foreclosure inventory rate decreased 36 basis points for FHA loans, and 27 basis points for VA loans.

Over the past year, the foreclosure starts rate slipped 1 basis point for prime loans and rose 6 basis points for subprime loans. The foreclosure starts rate was up 6 basis points for FHA loans, and down 2 basis points for VA loans compared with the same quarter one a year ago.   

The nation's foreclosure inventory posted a year-over-year decline of 27.3% in February, with completed foreclosures down 15.7%.

According data from property information, analytics and data-enabled services provider CoreLogic, there were 39,000 completed foreclosures nationwide in February compared with 46,000 a year earlier, representing a decrease of 67% from the peak of completed foreclosures in September 2010.

Completed foreclosures are an indication of the total number of homes actually lost to foreclosure. Since the financial meltdown began in September 2008, there have been approximately 5.6 million completed foreclosures across the country. Since home-ownership rates peaked in the second quarter of 2004, there have been approximately 7.7 million homes lost to foreclosure.

“The number of homes in foreclosure proceedings fell by 27% from a year ago and stands at about one-third of what it was at the trough of the housing cycle,” said Frank Nothaft, chief economist at CoreLogic.

Mortgage delinquencies

CoreLogic also reports the number of mortgages in serious delinquency fell 19.3% from February 2014 to February 2015, with 1.5 million mortgages -- or 4% -- in serious delinquency (defined as 90 days or more past due, including those loans in foreclosure or Real Estate Owned).

This is the lowest delinquency rate since June 2008. On a month-over-month basis, the number of seriously delinquent mortgages dipped 1.1%.

“While the drop in the share of mortgages in foreclosure to 1.4% is a welcome sign of continued recovery in the housing market,” Nothaft added, “the share remains more than double the 0.6% average foreclosure rate that we saw during 2000-2004.”

As of this past February, the national foreclosure inventory included approximately 553,000 homes compared with 761,000 homes in February 2014. The foreclosure inventory as of February 2015 represented 1.4% of all homes with a mortgage, versus 1.9% in February 2014.

“The foreclosure inventory dropped year-over-year in all but 2 states,” said Anand Nallathambi, president and CEO of CoreLogic. “The foreclosure rates in judicial foreclosure states are beginning to pick up and remain higher than in non-judicial states. What’s encouraging is that fewer Americans are seriously delinquent in paying their mortgages which in turn is reducing the foreclosure inventory across the country as a whole.”

Report highlights

• On a month-over-month basis, completed foreclosures were down 11.6% from the 44,000 reported in January 2015. As a basis of comparison, before the decline in the housing market in 2007 completed foreclosures averaged 21,000 per month nationwide between 2000 and 2006.
• The 5 states with the highest number of completed foreclosures for the 12 months ending in February 2015 were: Florida (110,000), Michigan (50,000), Texas (34,000), California (30,000) and Georgia (28,000). These 5 accounted for almost half of all completed foreclosures nationally.
• Four states and the District of Columbia had the lowest number of completed foreclosures for the 12 months ending in February 2015: South Dakota (15), the District of Columbia (83), North Dakota (334), West Virginia (506) and Wyoming (526).
• On a month-over-month basis, the foreclosure inventory was down by 1.4% from January 2015. The February 2015 foreclosure rate of 1.4% is back to March 2008 levels.
• Four states and the District of Columbia had the highest foreclosure inventory as a percentage of all mortgaged homes: New Jersey (5.3%), New York (4.0%), Florida (3.4%), Hawaii (2.8%) and the District of Columbia (2.6%).
• The 5 states with the lowest foreclosure inventory as a percentage of all mortgaged homes were: Alaska (0.3%), Nebraska (0.4%), North Dakota (0.5%), Montana (0.5%) and Minnesota (0.5%).

Both the foreclosure inventory and completed foreclosures posted declines in January.

According to CoreLogic's National Foreclosure Report, inventory dropped 33.2% and completed foreclosures were down 22.5% from January 2014. The report also shows there were 43,000 completed foreclosures nationwide in January 2015, compared with 55,000 a year earlier -- representing a decrease of 63% from the peak of completed foreclosures in September 2010. Completed foreclosures have declined every month for the past 37 consecutive months.

On a month-over-month basis, completed foreclosures were up 14.7% from the 37,000 reported in December 2014. As a basis of comparison, before the decline in the housing market in 2007, completed foreclosures averaged 21,000 per month nationwide between 2000 and 2006.

Completed foreclosures are an indication of the total number of homes actually lost to foreclosure. Since the financial meltdown began in September 2008, there have been approximately 5.5 million completed foreclosures across the country, and since home ownership rates peaked in the second quarter of 2004, there have been approximately 7 million homes lost to foreclosure.

Falling delinquency rates

“Job growth and home-value appreciation have worked to push the serious delinquency rate to the lowest since mid-2008 and foreclosures down by one-third from a year ago,” said Frank Nothaft, chief economist at CoreLogic. “With economic growth in 2015 expected to be better than last year, further declines in both delinquencies and foreclosures are projected for this year.”

As of January 2015,approximately 549,000 homes were in some stage of foreclosure compared with 822,000 homes in January 2014, representing 39 consecutive months of year-over-year declines. The foreclosure inventory as of January 2015 made up 1.4% of all homes with a mortgage, versus 2.0% the year before. On a month-over-month basis, the foreclosure inventory was down 2.7% from December 2014. The current foreclosure rate of 1.4% is back to March 2008 levels.

“The foreclosure inventory continues to shrink with declines in all 50 states over the past 12 months,” said Anand Nallathambi, president and CEO of CoreLogic. “Florida, one of the hardest hit states during the foreclosure crisis, experienced a decline of almost 50% year over year which is outstanding news.”

Report highlights

• The number of mortgages in serious delinquency declined 23.8 percent from January 2014 to January 2015 with 1.5 million mortgages, or 4 %, in serious delinquency (defined as 90 days or more past due, including those loans in foreclosure or REO). This was the lowest delinquency rate since June 2008.
• The foreclosure inventory has experienced 39 months of continuous declines and year-over-year double-digit declines for 28 consecutive months
• The 5 states with the highest number of completed foreclosures for the 12 months ending in January 2015 were: Florida (111,000), Michigan (51,000), Texas (34,000), California (30,000) and Georgia (28,000). These 5 accounted for almost half of all completed foreclosures nationally.
• Four states and the District of Columbia experienced the lowest number of completed foreclosures for the 12 months ending in January 2015: South Dakota (22), the District of Columbia (66), North Dakota (336), West Virginia (511) and Wyoming (532).
• Four states and the District of Columbia experienced the highest foreclosure inventory as a percentage of all mortgaged homes: New Jersey (5.2%), New York (4.0%), Florida (3.5%), Hawaii (2.7%) and the District of Columbia (2.5%).
• The 5 states with the lowest foreclosure inventory as a percentage of all mortgaged homes were Alaska (0.3%), Nebraska (0.4%), North Dakota (0.4%), Arizona (0.5%) and Montana (0.5%).

The number of U.S. foreclosures continued to dwindle in November.

According to CoreLogic, a provider of property information, analytics and data-enabled services for the month of November 2014, there were 41,000 completed foreclosures across the country, down 9.6% from the 46,000 tallied a year earlier and a drop of 64% from the peak of completed foreclosures in September 2010.

On a month-over-month basis, completed foreclosures were down 12.6% from 47,000 in October. As a basis of comparison, completed foreclosures averaged 21,000 per month nationwide between 2000 and 2006 -- prior to the housing market meltdown in 2007.

“The foreclosure rate fell in every state, with only the District of Columbia seeing a small increase," said Molly Boesel, CoreLogic senior economist. “However, some states still have foreclosure rates of more than twice the national rate. While the national level of foreclosures may normalize in the next 2 years, there will always be the potential for some pockets of distress in the mortgage market.”

Completed foreclosures are an indication of the total number of homes actually lost to foreclosure. Since September 2008, there have been approximately 5.5 million completed foreclosures across the country, and since homeownership rates peaked in the second quarter of 2004, there have been approximately 7 million homes lost to foreclosure.

November highlights

• November represents 26 consecutive months of double-digit declines in the year-over-year percent change in the foreclosure inventory.
• All states posted double-digit declines in foreclosure inventory year over year; but the District of Columbia saw a 17.8% increase.
• Thirty-five states showed declines in year-over-year foreclosure inventory of greater than 30%, with the largest declines in Florida (-48.1%) and Utah (-48.9%).
• The national serious delinquency rate was 4.0% in November -- down 22.8% from November 2013 and the lowest rate since June 2008.
• The 5 states with the highest number of completed foreclosures for the 12 months ending in November 2014 were: Florida (118,000), Michigan (50,000), Texas (36,000), California (29,000) and Ohio (29,000). These states accounted for almost half of all completed foreclosures nationally.
• Four states and the District of Columbia experienced the lowest number of completed foreclosures for the 12 months ending in November 2014: South Dakota (54), District of Columbia (62), North Dakota (298), West Virginia (534) and Wyoming (573).

Fewer U.S. homes are being foreclosed, but the rate remains well above what it was before the housing market collapsed.

According to CoreLogic, a property information, analytics and data-enabled services provider, there were 41,000 completed foreclosures nationally in October -- down 14,000 from the same month a year ago. That works out to a year-over-year decrease of 26.4% and is down 65% from the peak of completed foreclosures in September 2010.

On a month-over-month basis, completed foreclosures were down by 34.1% from the 62,000 reported in September 2014. And, as a basis of comparison, before the decline in the housing market in 2007, completed foreclosures averaged 21,000 per month nationwide between 2000 and 2006.

Completed foreclosures are an indication of the total number of homes actually lost to foreclosure. Since the financial meltdown began in September 2008, there have been approximately 5.3 million completed foreclosures across the country, and since home ownership rates peaked in the second quarter of 2004, there have been approximately 7 million homes lost to foreclosure.

Foreclosure inventory

As of October 2014, approximately 605,000 homes nationally were in some stage of foreclosure, known as the foreclosure inventory, compared with 875,000 in October 2013. That works out to a year-over-year decrease of 30.9% and marks 36 consecutive months of year-over-year declines.

The foreclosure inventory as of October 2014 made up 1.6% of all homes with a mortgage, versus 2.2% in October 2013. On a month-over-month basis, the foreclosure inventory was down 2.1% from September. The current foreclosure rate of 1.6% is the lowest inventory level since May 2008.

“While there has been a large improvement in the reduction of foreclosure inventory, completed foreclosures remain high and serve as one of the obstacles to new single-family construction,” said Sam Khater, deputy chief economist for CoreLogic. “Until the flow of completed foreclosures declines to normal levels, new-home construction will not pick up because builders have little incentive to compete with foreclosure stock.”

Anand Nallathambi, president and CEO of CoreLogic says that at current rates, the foreclosure inventory should slip below 500,000 units next year.

Report highlights

• October represents 25 consecutive months of year-over-year double-digit declines in the inventory of foreclosed homes.
• All but one state and the District of Columbia posted double-digit declines in foreclosure inventory year over year; West Virginia saw a decline of only 8.9%, and D.C. saw a 17.3%.
• Nineteen states showed declines in year-over-year foreclosure inventory of greater than 30%, with Florida (-44.9%) and Utah (-41.6%) experiencing the largest declines.
• The 5 states with the highest number of completed foreclosures for the 12 months ending in October 2014 were: Florida (118,000), Michigan (45,000), Texas (36,000), California (29,000) and Georgia (28,000). They accounted for almost half of all completed foreclosures nationally.
• Four states and the District of Columbia experienced the lowest number of completed foreclosures for the 12 months ending in October 2014: South Dakota (59), D.C. (70), North Dakota (257), West Virginia (515) and Wyoming (574).
• The 5 states with the highest foreclosure inventory as a percentage of all mortgaged homes were: New Jersey (5.5%), Florida (4.1%), New York (4.1%), Hawaii (2.9%) and Maine (2.6%).
• The 5 states with the lowest foreclosure inventory as a percentage of all mortgaged homes were: Alaska (0.4%), Minnesota (0.5%), Nebraska (0.5%), North Dakota (0.5%) and Wyoming (0.5%).

There's continued progress on the foreclosure front.

According to CoreLogic, a provider of property information and analytics, there were 46,000 completed foreclosures nationally during September, down from 68,000 a earlier -- a year-over-year decrease of 32.6% and down 61% from the peak in 2010.

On a month-over-month basis, completed foreclosures in September were up by 4.7% from the 44,000 reported in the month before. As a basis of comparison, before the decline in the housing market in 2007, completed foreclosures averaged 21,000 per month nationwide between 2000 and 2006.

“The number of completed foreclosures ticked up a bit in September from the prior month and is still running above historic norms,” said Anand Nallathambi, president and CEO of CoreLogic. “Although the foreclosure inventory and rates of seriously delinquent loans remain elevated in many states, progress is being made and this bodes well for a better housing market in 2015 and beyond.”

Completed foreclosures are an indication of the total number of homes actually lost to foreclosure. Since the financial meltdown began in September 2008, there have been approximately 5.2 million completed foreclosures across the country; since home ownership rates peaked in the second quarter of 2004, there have been approximately 7 million homes lost to foreclosure.

As of September 2014, approximately 607,000 homes nationally were in some stage of foreclosure, known as the foreclosure inventory, compared to 924,000 in September 2013, a year-over-year decrease of 34.3%.

The foreclosure inventory as of September 2014 made up 1.6% of all homes with a mortgage, compared with 2.3% in September 2013. The foreclosure inventory was down 2.8% from August 2014, representing 35 consecutive months of year-over-year declines.

“The level of serious delinquencies has rapidly declined over the last few years, but the pace of improvement is beginning to recede,” said Sam Khater, deputy chief economist at CoreLogic. “As of June, serious delinquencies were 26% lower than the prior year, but as of September serious delinquencies were 21% lower.”

Report highlights

• September represents 20 consecutive months of at least 20% year-over-year declines in the national inventory of foreclosed homes.
• All states posted double-digit declines in foreclosures year over year. The District of Columbia experienced a 7.1% increase.
• Twenty-nine states showed declines in year-over-year foreclosure inventory of greater than 30%, with Arizona (-47.6%) and Utah (-47.1%) experiencing the largest declines.
• The five states with the highest number of completed foreclosures for the 12 months ending in September 2014 were: Florida (120,000), Texas (36,000), California (31,000), Michigan (29,000) and Georgia (27,000). These 5 states accounted for almost half of all completed foreclosures nationally.
• Four states and the District of Columbia experienced the lowest number of completed foreclosures for the 12 months ending in September 2014: South Dakota (63), District of Columbia (68), North Dakota (286), West Virginia (458) and Wyoming (628).
• The 5 states with the highest foreclosure inventory as a percentage of all mortgaged homes were: New Jersey (5.7%), Florida (4.4%), New York (4.1%), Hawaii (2.9%) and Maine (2.7%).
• The 5 states with the lowest foreclosure inventory as a percentage of all mortgaged homes were: Nebraska (0.4%), Alaska (0.4%), Arizona (0.5%), North Dakota (0.5%) and Wyoming (0.5%).

The foreclosure tsunami that began building in 2007 crashed the housing market and very nearly brought down the world's financial system.

Since then, the housing market has slowly regained its health while foreclosures worked their way through the system and finally began to decline.

But lately there have been signs the housing market that began to heat up in 2013 has slowed considerably this year. Now there's a report that foreclosures have begun to rise again.

Is this something to worry about? Maybe not.

Mixed news

In its monthly report for August, RealtyTrac, which markets foreclosure data, reveals foreclosure filings rose 7% from July to August. However, filings were 9% lower than August 2013.

Foreclosure filings are everything from default notices to scheduled auctions to when the bank steps in and repossess the property.

Some people think of that last step, where the homeowners actually lose their house, as real foreclosure activity. There, the numbers are not very alarming.

During August 51,192 U.S. properties were scheduled to be sold at auction. That's down 1% from July and up only 1% from August 2013. In other words, that indicator is virtually unchanged.

But an increase in foreclosure activity could be a sign of trouble in the housing market if it were caused by more people losing their jobs or other factors that made them unable to afford their house payments.

Still cleaning up the mess

That doesn't seem to be the case. Daren Blomquist, vice president at RealtyTrac, says the increase is likely the result of loan servicers finally cleaning up the mess from years earlier.

“The annual increase in foreclosure auctions — the first since the robo-signing controversy rocked the foreclosure industry back in late 2010 — indicates mortgage servicers are finally adjusting to the new paradigms for proper foreclosure that have been implemented in many states, whether by legislation or litigation or both,” he said.

The settlement of charges linked to the massive “robo-signing” scandal required many servicers to make significant changes in the way they process foreclosures, and making these changes has taken years.

Market fallout

But there may be market fallout, and it might not be good for homeowners in states where the pent-up foreclosure activity has surged. Just look at what's about to happen in a handful of states.

Homes scheduled for foreclosure auction in August were up 160% in Colorado, 117% in Oregon, 81% each in New York and Connecticut, 72% in Oklahoma, 71% in New Jersey and up 25% in Illinois.

When homes go on the auction block, it is usually the loan servicer that steps in and purchases the property for the amount of the mortgage, so that the investors who purchased the mortgage get their money back.

The lender then turns around and puts the home on the market, usually at a significant discount to the market. That has a negative effect on nearby home values, since they are often based on what other homes are selling for. A couple of foreclosures in one block can bring down home values all along the street.

While the latest foreclosure numbers might not suggest foreclosures are becoming a problem again, the damage they cause isn't quite over yet.

There were 45,000 completed foreclosures across the U.S. during July, a decline of 21.2% from the 57,000 in July 2013.

In its National Foreclosure Report, CoreLogic also said that on a month-over-month basis, completed foreclosures were down by 8.5% from the 49,000 reported in June.

As a basis of comparison, before housing meltdown in 2007, completed foreclosures averaged 21,000 per month nationwide between 2000 and 2006.

Completed foreclosures are an indication of the total number of homes actually lost to foreclosure. Since the financial crunch began in September 2008, there have been approximately 5.1 million completed foreclosures across the country.

A “considerably brighter” picture

As of July 2014, approximately 640,000 homes in the U.S. were in some stage of foreclosure, known as the foreclosure inventory, compared with 976,000 in July 2013, a year-over-year decline of 34.4%. The foreclosure inventory as of July 2014 made up 1.6% of all homes with a mortgage, versus 2.4% a year earlier. The foreclosure inventory was down 3.3% from June 2014, representing 33 consecutive months of year-over-year declines.

"The stock of distressed debt continues to rapidly decline, especially in western states," said Sam Khater, deputy chief economist at CoreLogic. "The number of seriously delinquent loans fell by more than 25% from the prior year in 10 states and 7 of those states were in the west."

"Based on current trends, the overall foreclosure inventory could trend down to as low as 500,000 homes by year-end which is very positive news for the housing market. The picture is considerably brighter in the non-judicial states which maintain consistently lower foreclosure stocks and, in general, lower levels of serious delinquency," said Anand Nallathambi, president and CEO of CoreLogic. "In total, there are now 36 states with an inventory of foreclosed homes lower than the national rate of 1.7%."

Report highlights

• July represents 18 consecutive months of at least a 20% year-over-year decline in the national inventory of foreclosed homes.
• All but 2 states posted double-digit declines in foreclosures year over year. The District of Columbia saw a 6.3% decline and the state of Wyoming saw a 14.6% increase in foreclosures year over year.
• Thirty-one states show declines in year-over-year foreclosure inventory of greater than 30%, with Arizona and Utah experiencing declines at 49% each.
• The 5 states with the highest number of completed foreclosures for the 12 months ending in July 2014 were: Florida (120,000), Michigan (44,000), Texas (38,000), California (32,000) and Georgia (31,000).These 5 states account for almost half of all completed foreclosures nationally.
• The 4 states and the District of Columbia with the lowest number of completed foreclosures for the 12 months ending in July 2014 were: South Dakota (73), the District of Columbia (110), North Dakota (307), West Virginia (498) and Wyoming (677).
• The 5 states with the highest foreclosure inventory as a percentage of all mortgaged homes were: New Jersey (5.7%), Florida (4.8%), New York (4.3%), Hawaii (3.0%) and Maine (2.7%).
• The 5 states with the lowest foreclosure inventory as a percentage of all mortgaged homes were: Nebraska (0.4%), Alaska (0.4%), Arizona (0.5%), Minnesota (0.5%) and North Dakota (0.5%).

As has been rumored for weeks, the Justice Department and Bank of America have reached agreement on a massive $16.65 billion fine growing out of the housing meltdown and financial crisis.

“This historic resolution - the largest such settlement on record - goes far beyond ‘the cost of doing business,’” said Attorney General Eric Holder. "Under the terms of this settlement, the bank has agreed to pay $7 billion in relief to struggling homeowners, borrowers and communities affected by the bank’s conduct. This is appropriate given the size and scope of the wrongdoing at issue.”

The agreement resolves federal and state claims against Bank of America and its former and current subsidiaries, including Countrywide Financial Corporation and Merrill Lynch.

The bank has agreed to pay a $5 billion penalty under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) – the largest FIRREA penalty ever – and provide billions of dollars of relief to struggling homeowners, including funds that will help defray tax liability as a result of mortgage modification, forbearance or forgiveness.

The settlement does not release individuals from civil charges, nor does it absolve Bank of America, its current or former subsidiaries and affiliates or any individuals from potential criminal prosecution.

$7 billion for homeowners

That relief will take various forms, including principal reduction loan modifications that result in numerous homeowners no longer being underwater on their mortgages and finally having substantial equity in their homes.

It will also include new loans to creditworthy borrowers struggling to get a loan, donations to assist communities in recovering from the financial crisis, and financing for affordable rental housing.

Also, Bank of America has agreed to place over $490 million in a tax relief fund to be used to help defray some of the tax liability that will be incurred by consumers receiving certain types of relief if Congress fails to extend the tax relief coverage of the Mortgage Forgiveness Debt Relief Act of 2007.

"Real accountability"

“At nearly $17 billion, today’s resolution with Bank of America is the largest the department has ever reached with a single entity in American history,” said Associate Attorney General Tony West.

“But the significance of this settlement lies not just in its size; this agreement is notable because it achieves real accountability for the American people and helps to rectify the harm caused by Bank of America’s conduct through a $7 billion consumer relief package that could benefit hundreds of thousands of Americans still struggling to pull themselves out from under the weight of the financial crisis,” West said.

On television and in the movies, when the undead rise up and go on a rampage, it isn't good for anyone. The same is true when a house in foreclosure becomes a zombie.

A foreclosure becomes a zombie during that in-between time; the owner has moved out but the lender has yet to repossess. So the house sits, unoccupied, with grass growing unmowed and with no sign of life.

What happens next is fairly predictable. Vandals break in and do their thing. Thieves take anything of value, including the copper pipes and fixtures. If you live next door or across the street, it's not very pleasant.

Drawn-out process

Zombie foreclosures are usually the result of lengthy foreclosure timelines and changing state foreclosure laws. Many of these properties are not only likely to be eyesores but may also drive down the values of surrounding homes and erode local government tax revenue.

Distressed homeowners, once they realize they are going to lose the property, often don't hang around. They may not realize, however, they are still responsible for and owe property taxes on the zombie foreclosure.

As a result, tax revenue goes unpaid to the local government taxing entity. RealtyTrac, a foreclosure marketing compay, estimates that more than $400 million in property tax revenue nationwide is likely delinquent because of these zombie foreclosures.

The homeowner who has just lost their home now faces a mounting tax bill. The legal website Nolo.com advises that homeowners facing foreclosure should not abandon their homes until they are forced to. Otherwise, they could be on the hook for taxes, HOA dues and even some maintenance costs.

With a slowdown in foreclosures nationwide, there has been a reduction in zombie foreclosures. But there are still more than a healthy real estate market can easily absorb.

20% are zombies

RealtyTrac recently analyzed zombie foreclosures for the second quarter of 2014 — properties that have started the foreclosure process but never been foreclosed and the homeowner has vacated the property. It found that 1 in 5 foreclosures – 20% – are zombie foreclosures.

Nationwide, the trend is on the decline. Zombie foreclosures were down 7% from the first quarter of 2014 and down 16% from the same period a year ago. However, 24 states and the District of Columbia saw an increase from the previous quarter.

Ten states and the District of Columbia saw an increase from a year ago, with New Jersey up 58% and New York up 38%. The problem is especially bad in Florida, which accounted for more than a third of all zombie foreclosures.

Daren Blomquist, vice president at RealtyTrac, says most of these states have something in common; while foreclosures nationally are on the decline, they have increased dramatically in those states.

“For example, New Jersey foreclosure activity year-to-date is up 57% from a year ago, Maryland up 23%, Delaware up 16%, Maine up 12%, Wyoming up 27%, and Iowa up 6%,” Blomquist said. “These states are bucking the national trend, where foreclosure activity is down 23% compared to a year ago. New York is about flat in terms of foreclosure activity year-to-date, but it’s coming off a long string of increases that ended in March this year. Prior to March, foreclosure activity in New York had increased on a year-over-year basis for 23 consecutive months.”

Some states have taken action to reduce the number of foreclosed left abandoned by both their former owners and lenders. Florida and Illinois have passed foreclosure “fast track” laws to move these properties through the system more quickly.

Blomquist says New York is considering legislation that goes a step further, making lenders responsible for the upkeep of vacant homes during the foreclosure process.

What to do

Absent changes in the law, neighbors can apply pressure on lenders to maintain a vacant property. Calling a Realtor to learn which bank owns the property is a first step.

Next, an organized phone call, letter-writing and email campaign by neighbors on the street may yield some results.

Neighbors, after all, have the most at stake. A foreclosure on the block will reduce the value of other nearby homes. A zombie foreclosure will reduce property values even more and make it difficult to sell a nearby home.

The headline is comforting – “foreclosure inventory down 33% from a year ago.” It suggests a housing market that is healing from the worst collapse since the Great Depression.

The reality, however, may not be so reassuring.

First, the good news. In January there were 48,000 completed foreclosures in the U.S., down from 59,000 in January 2013, according to CoreLogic, an analytics services provider. That's a year-over-year improvement of 19% and certainly worth celebrating.

Long way to go

But the foreclosure process has a long way to go before it's back to normal. Consider this; between 2000 and 2006, before the housing market went over a cliff, foreclosures averaged only 21,000 per month. So foreclosures are still running more than 125% higher than they were before the start of the recession. CoreLogic tells us that, since the beginning of the financial crisis in September 2008, there have been nearly 4.9 million completed foreclosures.

When you consider homes that are in some stage of foreclosure – not just those repossessed by the bank – you also see some improvement but it's also hard not to see the difficulty as well. In January 2.0% of all U.S. homes with a mortgage were in some stage of foreclosure. It leaves analysts wondering if the glass is half-empty or half-full.

“We are recovering, but we’re not there yet,” said Mark Fleming, chief economist for CoreLogic. “For every completed foreclosure, there are 954 mortgaged homes in non-judicial foreclosure states and 896 mortgaged homes in judicial foreclosure states. Although this is a big improvement relative to the height of the foreclosure crisis, a healthier ratio would be one for every 2,000.”

Foreclosures in New York and New Jersey

Because real estate economies vary market to market, an improvement in one area is not always matched by a similar improvement elsewhere. A report last week by the Mortgage Bankers Association (MBA) showed that in the fourth quarter of last year the robust housing markets of New York and New Jersey continued to show rising foreclosure rates. In fact, while Florida continues to lead the nation in the percentage of loans in foreclosure, New Jersey and New York are numbers two and three.

Michael Fratantoni, MBA’s chief economist and Senior Vice President of Research and Industry Technology, notes that states with judicial foreclosure systems, meaning foreclosures must pass muster with the courts, have the highest foreclosure rates, suggesting many of these foreclosures have been in the pipeline for years.

“While the percentage of loans in foreclosure dropped in both judicial and nonjudicial states, the average rate for judicial states was 4.92% compared to the average rate of 1.52% for nonjudicial states,” Fratantoni said.

Civil rights issue?

Foreclosures have also increased sharply in Maryland, prompting Casa de Maryland and other civil rights groups to recently take their case to members of the state legislature, asking the government to impose a moratorium on foreclosures the groups contend are falling hardest on low-income homeowners.

If reckless and abusive practices in the subprime mortgage market led to the wave of foreclosures, what is causing them now? Most of the subprime foreclosures have already worked their way through the system and laws are in place to prevent them from reoccurring.

Loss of income

Today's foreclosures are more likely the result of an anemic job market. Unemployment remains high and many people that want full time jobs are only working part time. In a household requiring two incomes to pay the mortgage, one person losing their income can be enough to tip a household into foreclosure.

The consumer group Center for Responsible Lending says it would like to see stronger foreclosure prevention efforts at both the federal and state levels. Making it easier for middle class buyers to obtain a mortgage, so that when a family in economic distress must sell their home there will be buyers – would also help, the group says.

On cue, at least one major bank this month indicated that it is broadening its criteria for making mortgage loans with an eye toward making more consumers eligible. The idea is to making loans available to people who, in the wake of the financial crisis, have been virtually shut out of the housing market.

No one is using the term “subprime lending.” At least, not yet.

The number of foreclosures posted a sharp year-over-year decline during October.

According to CoreLogic, a  provider of residential property information, analytics and services, there were 48,000 completed foreclosures -- a drop of 30% from 68,000 at the same time in 2012.

On a month-over-month basis, completed foreclosures were down 25.6% from the 64,000 reported in September.

Completed foreclosures are an indication of the total number of homes actually lost to foreclosure. Since the financial meltdown began in September 2008, there have been approximately 4.6 million completed foreclosures. As a basis of comparison, prior to the 2007 decline in the housing market, completed foreclosures averaged 21,000 per month nationwide between 2000 and 2006.

As of October 2013, approximately 879,000 U.S. homes were in some stage of foreclosure, known as the foreclosure inventory, compared with 1.3 million in October 2012 -- a year-over-year decrease of 31%. The foreclosure inventory as of October 2013 represented 2.2% of all homes with a mortgage, versus 3.1% a year earlier. The inventory was down 2.9% on a month-over-month basis.

‘Good news’ for the housing market

"Year over year, the foreclosure inventory, as a percentage of all homes with a mortgage, has declined almost a full percentage point to 2.2 percent," said Mark Fleming, chief economist for CoreLogic. "This is good news for the housing and mortgage finance markets, but the rate remains elevated relative to the pre-crisis level of about 0.6 percent. There are almost 900,000 properties still in foreclosure, but a normal level would be only a quarter of the current stock."

The scourge of an elevated foreclosure inventory is easing. In October, every state posted a year-over-year decline in completed foreclosures. "Additionally, the rate of serious delinquencies, which fell more than 25 percent year over year, is at the lowest level in nearly five years,” said Anand Nallathambi, president and CEO of CoreLogic, adding that this is “great news as we head into a new year."

Report highlights

• The five states with the highest number of completed foreclosures for the 12 months ending in October 2013 were: Florida (115,000), Michigan (50,000), California (46,000), Texas (43,000) and Georgia (39,000). These five states account for almost half of all completed foreclosures nationally.

• The five states with the lowest number of completed foreclosures for the same 12 months were: District of Columbia (57), North Dakota (411), Hawaii (491), West Virginia(514) and Wyoming (694).

• The five states with the highest foreclosure inventory as a percentage of all mortgaged homes were Florida (7.1%), New Jersey (6.7%), New York (4.9%), Maine (3.8%) and Connecticut (3.7%).

• The five states with the lowest foreclosure inventory as a percentage of all mortgaged homes were:Wyoming (0.4%), Alaska (0.6%), Nebraska (0.6%), North Dakota (0.7%) and Colorado (0.7%).

By most accounts, a building wave of foreclosures served as the catalyst for the housing market meltdown and financial crisis of 2008. Five years later the falling rate of foreclosures suggests the housing market has regained its equilibrium.

A recent report by CoreLogic found about one million U.S. homes in foreclosure inventory at the end of June. That's down about 400,000 from June 2012, a year-over-year decrease of 28%. It also represents a 2.9% drop from the previous month.

That one million homes currently in some stage of foreclosure represent 2.5% of all homes in the U.S. with a mortgage. That compares to 3.4% in June 2012.

Are things back to normal yet? Despite the recent improvement, probably not. With 4.5 million homes lost to foreclosure over the last five years, that works out to 900,000 foreclosures per year, on average. In a typical month before 2007, the number was closer to 250,000.

Subprime time bomb

Many of the foreclosures in 2008 and 2009 were directly linked to subprime loans. Consumers who couldn't really afford the homes they purchased were able to get subprime loans that offered very low “teaser” rates for the first year or two before they adjusted sharply higher.

When the loan rates adjusted, the homeowners, in many cases, couldn't afford the monthly payment. Foreclosures began to build within the market, adversely affecting mortgage-backed securities and setting off the banking crisis.

But unfortunately the foreclosure wave spread beyond the subprime sector. The collapse of the housing market and the onset of the banking crisis turned the recession into the Great Recession, causing unemployment to surge. All of a sudden people with prime loans lost their jobs and were unable to keep making their house payments. In 2010 the foreclosure wave continued to build.

The latest numbers suggest stability is returning but there are still some areas of concern. RealtyTrac, in its report on July foreclosures, found that foreclosure activity increased 2.0% over June, while sharply lower from year-over-year levels. Much of the July jump was caused by a spike in foreclosure starts during the month. In the video below, RealtyTrac's Daren Blomquist provides an overview of the findings.

Other data

Other data may also be cause for concern. According to an August report by PropertyShark.com, foreclosure activity is picking up in the nation's largest real estate market. The report found that 348 New York City properties were scheduled for auction in the second quarter of 2013, a 138% surge from the first quarter. That's up 39% year-over-year, with only Manhattan and Staten Island showing signs of stability.

With data on the issue presenting a mixed picture, the consumer group Center for Responsible Lending is expressing concern about policies it says will likely discourage first-time home buyers and perhaps threaten the housing recovery. In particular, it says a proposal for government-mandated down payment standards would weaken the housing market and overall economy.

“A successful housing market needs new homeowners available to purchase properties,” CRL said in a statement. “If mandated down payment standards went into effect – instead of letting the market determine appropriate down payment standards – then fewer families could become first-time home buyers.”

Using 2010 figures the group said it would take the typical U.S. family 22 years to save for a 10% down payment for the typical home. Closing costs for fees and escrow often require another 3% in savings.

“This decreased demand for housing would result in falling housing prices. In this situation, existing homeowners would lose equity in their homes, possibly pushing them underwater on their mortgage and even into default,” CRL said. “As a result, down payment mandates could undermine the nascent housing market recovery and plunge the economy into turmoil.”

If you’re looking to buy a home that’s going through foreclosure, your choices are a little more limited these days.

CoreLogic,which provides property information and services provider, says there were 52,000 completed foreclosures in the U.S. in May -- down 27% from the same time a year ago. On a month-over-month basis, completed foreclosures increased 3.5 percent, from 50,000 in April -- to 52,000 in May.

Residential shadow inventory, or pending homes, as of April 2013 was under 2 million units -- a supply of 5.3 months. That’s down 34% from its peak in 2010, when it reached 3 million homes, and down 18% from a year ago, when it was at 2.4 million.

Foreclosures continue

As a basis of comparison to the 52,000 completed foreclosures reported for May 2013, prior to the decline in the housing market in 2007, completed foreclosures averaged 21,000 per month nationwide between 2000 and 2006. Completed foreclosures are an indication of the total number of homes actually lost to foreclosure. Since the financial meltdown began in September 2008, there have been approximately 4.4 million completed foreclosures across the country.

As of this past May, approximately 1.0 million homes in the U.S. were in some stage of foreclosure, known as the foreclosure inventory, versus 1.4 million in May 2012, a year-over-year decrease of 29%.

Month over month, the foreclosure inventory was down 3.3% from April 2013 to May 2013. The foreclosure inventory as of May 2013 represented 2.6% of all homes with a mortgage compared with 3.5% in May 2012.

At the end of May 2013, there are fewer than 2.3 million mortgages, or 5.6%, in serious delinquency (SDQ, defined as 90 days or more past due, including those loans in foreclosure or REO). The rate of seriously delinquent mortgages is at its lowest level since December 2008.

"The stock of seriously delinquent homes, which is the main driver of shadow inventory, is at the lowest level since December 2008," said Dr. Mark Fleming, chief economist for CoreLogic. "Over the last year it has decreased in 42 states by double-digit figures, resulting in rapid declines in shadow inventory for the first quarter of 2013."

"We continue to see a sharp drop in foreclosures around the country and with it a decrease in the size of the shadow inventory. Affordability, despite the rise in home prices over the past year, and consumer confidence are big contributors to these positive trends," said Anand Nallathambi, president and CEO of CoreLogic. "We are particularly encouraged by the broad-based nature of the housing market recovery so far in 2013."

Foreclosure highlights

• The five states with the highest number of completed foreclosures for the 12 months ending in May 2013 were: Florida (103,000), California (76,000), Michigan (64,000), Texas (51,000) and Georgia(47,000). These five states account for almost half of all completed foreclosures nationally.
• The five states with the lowest number of completed foreclosures for the 12 months ending in May 2013 were: District of Columbia (108), Hawaii (453), North Dakota (467), West Virginia (517) andMaine (644).
• The five states with the highest foreclosure inventory as a percentage of all mortgaged homes were:Florida (8.8%), New Jersey (6.0%), New York (4.8%), Maine (4.1%) and Connecticut (4.1%).
• The five states with the lowest foreclosure inventory as a percentage of all mortgaged homes were:Wyoming (0.5%), Alaska (0.6%), North Dakota (0.6%), Nebraska (0.8%) and Virginia (0.8%).

Despite improvements in the housing market, many homeowners are still having trouble paying their monthly mortgage. The number of foreclosed homes on the market has been steadily falling but some of the recent numbers about loan payments are troubling.

The rate of delinquent home loans rose to 7.25% in the first quarter of the year, an increase of 16 basis points from the previous quarter, according to the Mortgage Bankers Association (MBA). The rate is lower, however, than it was a year ago.

The rate includes mortgage loans that are at least one month behind but does not include any that are in foreclosure. For now, the number of loans in which foreclosure action has started remains low. The share of loans in the foreclosure process was just 3.55% at the end of the first quarter, the lowest it's been since 2008.

Slight increase in late payments

“On a seasonally adjusted basis, the overall delinquency rate increased this quarter, driven by a slight increase in the 30-day delinquency rate,” said Michael Fratantoni, MBA’s VP of Research and Economics. “Normal seasonal patterns are beginning to re-emerge, but as has been true post-crisis, it is still difficult to parse typical seasonal swings from true changes in performance.”

“Over the past 2 1/2 years, they have lost my paperwork four times,” Christine wrote to ConsumerAffairs. “The last time it was 'never received.' I took a video of myself filling out all the pages and mailing it certified at the post office. Two months ago, I received notice from a foreclosure attorney telling me they were going to start the process.”

Mixed messages

Maria, of Perth Amboy, N.J., writes that she too has been trying to hold off foreclosure after she and her husband both lost their jobs. She says she keeps getting inconsistent information from HSBC.

Fratantoni said he is seeing what he calls “substantial improvements” in the overall foreclosure situation. For example, the inventory of foreclosed homes declined in 40 states. That's one reason the overall inventory of homes has fallen and prices have risen lately.

“However, 33 states had increases in foreclosure starts, he said.

Whether this is a blip or a troubling reversal of the recent positive trend will play out in the next few months. Meanwhile, the Center for Responsible Lending and Consumers Union are pushing regulators and lawmakers to take steps to prevent a resurgence of avoidable foreclosures.

Among the proposals is a requirement for lenders to engage in loss mitigation activities to prevent avoidable foreclosures and to refrain from pursuing foreclosure while at the same time processing a request for a loan modification — so-called “dual tracking,” a source of widespread complaints.

The groups say the reforms are needed to prevent a new wave of foreclosures.

It was just last week that, with much fanfare, various federal agencies announced that consumers would be getting $3.6 billion in checks from mortgage servicing companies that had taken shortcuts in foreclosure actions.

Well, sure enough, the checks have been arriving but consumers have been having trouble trying to cash them because their banks said funds were not available to cover the checks. Some checks have cleared though. Nearly 50,000 checks totaling nearly $50 million had been cashed or deposited as of close of business on Monday, according to officials at the Office of the Comptroller of the Currency.

It's the latest embarrassment for federal regulators, who have already been criticized for accepting a lower settlement than consumer advocates thought was reasonable.

A company called Rust Consulting Inc. was hired by the 13 mortgage servicers involved in the settlement to process payments to 4 million consumers. But reports say that Rust has been unable to convince banks that they should honor some of the first 1.4 million checks that have gone out.

Rust confirmed today that some early payment recipients were told that their checks could not be cashed due to insufficient funds. Rust says it can verify that $3.6 billion is available to be cashed or deposited.

“We apologize to anyone who experienced problems trying to cash their checks. We are working hard and communicating with the banking regulators, the servicers, and other banks to ensure those issues are not repeated,” Rust Consulting Senior Vice President James Parks said. “We want to assure the public that checks we have mailed under the Independent Foreclosure Review Payment Agreement process are valid.”

What to do

Borrowers with questions regarding payments should contact Rust Consulting at 1-888-952-9105, Monday through Friday, 8 a.m. - 10 p.m. ET or Saturday, 8 a.m. - 5 p.m. ET.

Financial institutions experiencing difficulties cashing payments should call 1-855-460-1528 for assistance. Payments will continue through July 2013. The distribution is the result of an agreement between 13 mortgage servicers, the Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System.

Some pretty big checks

Although consumer advocates have criticized the feds for not going after a larger settlement, there are some pretty big checks involved. While some borrowers will get as little as $300 from the settlement, others will get as much as $125,000.

The agreement affects borrowers whose homes were in any stage of foreclosure in 2009 or 2010 and whose mortgages were serviced by Aurora, Bank of America, Citibank, Goldman Sachs, HSBC, JPMorgan Chase, MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust, US Bank, and Wells Fargo.

In the initial part of the settlement, payments will not be made to borrowers who were serviced by Morgan Stanley and Goldman Sachs. Those payments will be announced later.

The OCC said that checks will be sent in several waves.  The first wave of 1.4 million checks was sent on April 12.  The final wave is expected in mid-July 2013.  More than 90 percent of the total payments to borrowers at those 11 servicers are expected to be sent by the end of April.

Since the foreclosure crisis peaked there have been several settlements between mortgage servicers and borrowers who lost their homes to foreclosure. The one getting the most attention was the 2012 settlement involving 49 states and the U.S. government for $25 billion.

Payments begin this month to borrowers involved in another, smaller settlement with 13 mortgage servicers. But even though the settlement amount is $3.6 billion as opposed to $25 billion, the 4.2 million borrowers may stand to get a much larger check than those in the previous settlement.

In the $25 billion settlement with five loan servicers over illegal “robo-signing” of foreclosure documents, borrowers received only $1.5 billion of the $25 billion settlement. Most of the rest went to federal and state governments.

Larger payments

In this latest settlement, between the Comptroller of the Currency, Federal Reserve and 13 loan servicers, payments are likely to be more generous. While some borrowers will get as little as $300 from the settlement, others will get as much as $125,000.

The agreement affects borrowers whose homes were in any stage of foreclosure in 2009 or 2010 and whose mortgages were serviced by Aurora, Bank of America, Citibank, Goldman Sachs, HSBC, JPMorgan Chase, MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust, US Bank, and Wells Fargo.

In the initial part of the settlement, payments will not be made to borrowers who were served by Morgan Stanley and Goldman Sachs. Those payments will be announced later.

'Deficient practices'

The 13 mortgage servicers had been cited for “deficient practices in mortgage loan servicing and foreclosure processing.” The settlement resolves enforcement action brought by the Comptroller of the Currency and the Federal Reserve.

George, of Friendswood, Tex., could be among those receiving a check.

“Chase wrongfully foreclosed on me after I won free and clear title in a lawsuit and they tied up my title,” he wrote at ConsumerAffairs. “Chase recorded the alleged foreclosure sale while a restraining order was in place preventing them from doing so. Chase attorneys have argued that they don't have to provide payoff information if they choose not to do so. Chase attorneys have also argued that they do not have any responsibility to deal in good faith.”

Carlton, of Rochester, N.H., found himself in a foreclosure battle with US Bank when he and his wife tried to modify their loan.

“We sent certified copies of what they asked for,” he wrote. “They received and signed for it then we were told we never sent it even though we had copies of signatures. We kept getting bounced around from one operator to the next, had to re-tell our story, called liars and so on. Even though we were trying to get modification we were told that we were going into foreclosure. We also found out the the gentleman my wife was speaking with about the modification had his name forged on documents they sent us.”

In a bit of irony, Melissa, of Keller, Tex., says she used to work in Bank of America's mortgage department.

“I was always shocked to be processing loans that were in the foreclosure process for years,” Melissa wrote in a ConsumerAffairs post. “I left Bank of America and two months later my husband was laid off. I tried to get a modification and was told I had too much debt for Bank of America to help me.”

Check's in the mail

If Melissa, Carlton and George are eligible for a payment under the settlement, they and others like them will receive a check from RUST, the settlement agent. According to the Comptroller of the Currency, accepting a settlement check does not prevent any borrower from taking independent legal action against a loan servicer.

What to do

If you are scheduled to receive a payment, you do not have to take any action. If you have questions, you can contact RUST at 1-888-952-9105, Monday through Friday, 8 a.m. - 10 p.m. ET or Saturday, 8 a.m. - 5 p.m. ET.  

Another indication that the housing market is on the comeback trail.

RealtyTrac says foreclosure filings -- default notices, scheduled auctions and bank repossessions -- were reported on 150,864 U.S. properties in January -- a decrease of 7 percent from December and down a whopping 28 percent from January 2012. It also reports one in every 869 U.S. housing units filed for foreclosure during the month.

“The U.S. foreclosure landscape in January was profoundly altered by the effects of new legislation that took effect in California on the first of the year,” said Daren Blomquist, vice president at RealtyTrac. “Dubbed the Homeowners Bill of Rights, this legislation extends many of the principles in the national mortgage settlement -- including a prohibition on so-called dual tracking and requiring a single point of contact for borrowers facing foreclosure -- to all mortgage servicers operating in California. In addition the new law imposes fines of up to $7,500 per loan for filing of multiple unverified foreclosure documents. As a result, the downward foreclosure trend in California accelerated into hyper speed in January, decisively shifting the balance of power when it comes to the nation’s foreclosure activity.”

Blomquist notes that for the first time since January 2007, California did not have the most properties with foreclosure filings of any state. That dubious distinction went to Florida, where January foreclosure activity increased on an annual basis for the 11th time in the last 13 months.”

Report findings

• U.S. foreclosure starts were down 11 percent from the previous month and down 28 percent from a year ago to the lowest level since June 2006 -- a 79-month low.
• U.S. bank repossessions (REO) decreased 5 percent from the previous month and were down 24 percent from January 2012 to the lowest level since February 2008.
• Scheduled foreclosure auctions increased from the previous month in 26 states and the District of Columbia, hitting 12-month or more highs in several key judicial foreclosure states, including Florida, Illinois, Pennsylvania, and New Jersey, although foreclosure starts were down on a year-over-year basis in Florida, Illinois and Pennsylvania.
• Some of the biggest year-over-year increases in foreclosure starts came in non-judicial foreclosure states where legislation or court rulings stalled foreclosure actions last year: Arkansas (539 percent increase), Washington (179 percent increase), and Nevada (87 percent increase).
• Florida posted the nation’s highest state foreclosure rate for the fifth month in a row in January, and also had the highest number of properties with foreclosure filings for the month, marking the first month since January 2007 that California has not had the highest number of properties with foreclosure filings.

Highest state foreclosure rates

The Florida foreclosure rate ranked highest among the states for the fifth month in a row. One in every 300 Florida housing units had a foreclosure filing in January -- more than twice the national average. A total of 29,800 Florida properties had a foreclosure filing during the month, up 12 percent from the previous month and up 20 percent from January 2012.

With one in every 344 housing units with a foreclosure filing in January, Nevada posted the nation’s second highest foreclosure rate for the fourth consecutive month. Overall Nevada foreclosure activity decreased 43 percent from a year ago, but foreclosure starts (NODs) increased 19 percent from the previous month and were up 87 percent from January 2012 to a 16-month high.

A 32 percent month-over-month jump in scheduled foreclosure auctions helped the Illinois foreclosure rate rise to third highest among the states in January. One in every 375 Illinois housing units had a foreclosure filing during the month.

Other states with foreclosure rates among the nation’s 10 highest were Arizona (one in 501 housing units with a foreclosure filing), Georgia (one in 513 housing units), Ohio (one in 612 housing units), Washington (one in 674 housing units), California (one in 753 housing units), Indiana (one in 784 housing units), and Michigan (one in every 837 housing units).

For yet another month, there were fewer than expected foreclosure filings, adding to the optimism that the housing market is beginning to recover. But activity spiked in a number of states, leading some to warn that a shadow inventory of distressed properties has yet to hit the market.

First, the encouraging data. In September, foreclosure filings, which include everything from default notices to bank repossessions, fell seven percent from August and were down 16 percent from September 2011, according to RealtyTrac, a foreclosure marketing company.

Third quarter numbers also fall

The decrease in September helped drop the third quarter foreclosure numbers to the lowest level since the fourth quarter of 2007. Foreclosure filings were reported on 531,576 U.S. properties during the quarter, a decrease of five percent from the second quarter and a decrease of 13 percent from the third quarter of 2011. It's also the ninth consecutive quarter with an annual decrease in foreclosure activity. The report also shows one in every 248 U.S. housing units with a foreclosure filing during the quarter.

“We’ve been waiting for the other foreclosure shoe to drop since late 2010, when questionable foreclosure practices slowed activity to a crawl in many areas, but that other shoe is instead being carefully lowered to the floor and therefore making little noise in the housing market — at least at a national level,” said Daren Blomquist, vice president at RealtyTrac. “Make no mistake, however, the other shoe is dropping quite loudly in certain states, primarily those where foreclosure activity was held back the most last year.

Pace picks up in some states

Those are so-called "judicial foreclosure" states, where the law requires a foreclosure to go through the court system. In these states mortgage servicers got into trouble when it was discovered they were cutting corners with documents. Many foreclosures were placed on hold until a settlement was signed last spring.

As a result several 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.

"Several states where the foreclosure flow was not so dammed up last year could see a roller-coaster pattern in foreclosure activity going forward because of recent legislation or court rulings that substantively change the rules to properly foreclose,” Blomquist said. “A backlog of delayed foreclosures will likely build up in those states as lenders adjust to the new rules, with many of those delayed foreclosures eventually hitting down the road.”

Market could take a hit

Meaning more distressed properties could soon be headed for the market. While that may be good news for buyers in search of a bargain, it's not so good for the housing market as a whole, which needs to see some price appreciation, especially in cases where mortgage-holders are under water.

Meanwhile, September's overall decline in foreclosure can be traced to sizable drops in non-judicial states where the problem had been most pronounced. California, Georgia, Texas, Arizona and Michigan all showed marked improvement in their foreclosure numbers.

Of the 24 non-judicial states, 20 reported year-over-year decreases in foreclosure activity.

For the nation as a whole, August was another fairly quiet month for foreclosures. But there were some exceptions.

The latest report from RealtyTrac, a marketer of foreclosure properties, shows foreclosures rose just one percent in August -- and were down 15 percent from a year ago -- but a handful of states saw a lot more action.

“Bucking the national trend, deferred foreclosure activity boiled over in several states in August,” said Daren Blomquist, vice president of RealtyTrac. “In judicial states (states where court action is required to foreclose on a home) such as Florida, Illinois, New Jersey and New York, this was a continuation of a trend we’ve been seeing for several months now.”

The increases in Florida and Illinois pushed foreclosure rates in those states to the two highest in the country, taking the place of non-judicial states like Arizona, California, Georgia and Nevada. Before last month the nation’s top two state foreclosure rates have been from those four non-judicial states every month since December 2010.

Effects of settlement

That increase is due to the national settlement between major mortgage lenders and the states and federal government, signed in the spring. Prior to that settlement many foreclosures in states that require judicial proceedings to foreclose on a home had been put on hold.

In an encouraging sign, foreclosure activity in most non-judicial states continued to decline. That suggests most cases of distressed property have already been resolved.

Illinois posted the nation’s highest foreclosure rate, with one in every 298 housing units subject to a foreclosure filing. August was the first month that Illinois has ranked No. 1 since RealtyTrac began issuing its report in January 2005.

Twenty states registered year-over-year increases in foreclosure activity, led by judicial foreclosure states such as New Jersey, New York, Maryland, Illinois and Pennsylvania.

Florida foreclosures

Florida, a hotbed of foreclosure activity since the housing meltdown began, saw its foreclosure activity increase in August on a year-over-year basis for the seventh time in the last eight months, helping the state post the nation's second highest foreclosure rate: one in every 328 housing units received a foreclosure filing.

Despite a 32 percent year-over-year decrease in overall foreclosure activity in August -- the ninth consecutive month with an annual decrease -- California still managed to post the nation’s third highest state foreclosure rate. One in every 340 California housing units had a foreclosure filing in August -- twice the national average.

Other states with foreclosure rates among the nation’s 10 highest were Arizona, Nevada, Georgia, Ohio, Michigan, Delaware and Colorado.

Struggling homeowners fell further behind in the second quarter of the year. The Mortgage Bankers Association (MBA) reports the delinquency rate for loans on one-to-four-unit residential properties increased to 7.58 percent of all loans.

That's up slightly from the first quarter, though down 0.86 percent from the second quarter of 2011. As a means of comparison, the delinquency rate was only 4.7 percent of loans in the first quarter of 2006 -- the height of the housing bubble.

What do the numbers tell us about the housing market and the economy? Jay Brinkmann, MBA’s Chief Economist, says even though the increase in delinquencies was small, it's still troubling.

Positive trend reversed

"Perhaps more important than the small size of the increase, however, is the fact that it reversed the trend of fairly steady drops in delinquencies we have seen over the last year," Brinkmann said. "This is consistent with the slowdown in the economy during the first half of the year and our stubbornly high unemployment rate. Whether this is just a temporary blip or a sign of a true change in direction for mortgage performance will fundamentally depend on the direction of employment over the remainder of the year.”

The delinquency rate includes loans that are at least one payment past due but does not include loans in the process of foreclosure. The percentage of loans on which foreclosure actions were started during the second quarter was 0.96 percent -- unchanged from last quarter and from one year ago.

The percentage of loans in the foreclosure process at the end of the second quarter was 4.27 percent, down slightly from the first quarter and one year ago. The serious delinquency rate, the percentage of loans 90 days or more past due or in the process of foreclosure, was 7.31 percent, also down quarter-over-quarter and year-over-year.

11.62 percent late or in foreclosure

That means that the combined percentage of loans in foreclosure or at least one payment past due was 11.62 percent -- higher than the first quarter but lower than the second quarter of 2011. Taken together, the numbers seem to suggest that while improving as quickly as many economists would like, the situation regarding homeowners' ability to make their payments is better this year than 2011.

Another eye-catching stat in the MBA report was the huge jump in foreclosure starts on FHA loans. The rate set an all-time record for FHA loans, but it was only slightly higher than the previous high set in 2010.

Brinkmann says the jump was due to one or more large servicers of FHA loans restarting foreclosure actions on delinquent FHA loans after the completion of the Department of Justice review and the mortgage servicing settlement. He says it does not represent a significant decline in FHA performance.

These loans had been considered seriously delinquent for some time and have now been moved from the 90-plus day delinquency bucket to the in foreclosure bucket, with little net change.

Despite predictions that a massive settlement between the states and five mortgage servicers would unleash a flood of foreclosures this year, the flood is more of a trickle.

The latest data from RealtyTrac, a company tracking U.S. foreclosures, shows default notices, scheduled auctions and bank repossessions were reported on 191,925 U.S. properties in July, a decrease of three percent from the previous month and a decrease of 10 percent from July 2011.

The report also shows one in every 686 U.S. housing units with a foreclosure filing during the month.

Uneven descent

“U.S. foreclosure activity continued its uneven descent in July as the overall numbers declined on an annual basis for the 22nd straight month, but properties starting the foreclosure process increased on an annual basis for the third straight month,” said Daren Blomquist, vice president of RealtyTrac. “Recent foreclosure activity patterns vary significantly from state to state, often hinging on the level of dysfunction that exists in each state’s foreclosure process."

For example, Blomquist says in states like Florida, Illinois and New Jersey, where processing and procedural issues slowed foreclosure activity to a crawl last year, foreclosure numbers continue to rebound off those artificially low levels. But in states like Texas, Arizona and Virginia, where the average time to foreclose is well below the national average of 378 days, foreclosure activity continues on a long-term downward trend.

REOs are down

The decline in overall foreclosure activity was driven primarily by a 21 percent year-over-year decrease in bank repossessions (REO) the data show. But no one is suggesting the foreclosure crisis has suddenly been resolved.

Blomquist notes that recent legislation and court rulings could lengthen the foreclosure process in some of the states with the shorter timelines, resulting in a temporary foreclosure lull and subsequent rebound in those states as well.

He also notes the "conspiracy theories" floating around the real estate industry, that banks are purposefully holding back REO properties from the market. The theory goes that banks don't have to show the loss until the property actually sells. Keeping it on the books at an inflated price makes the bank's balance sheet better than it actually is.

Another theory is that banks are trying to control the flow of foreclosures to the market to keep prices on their current slow, steady rise.

'Malevolent masters'

"This is the stuff conspiracy theorists latch on to, always looking for an opportunity to portray the big banks as malevolent masters of the housing market," Blomquist wrote in a recent op-ed piece. "While many of the conspiracy theories involving the big banks are unfounded, there are some rational reasons why banks would want to intentionally restrict the supply of bank-owned properties available for sale."

Meanwhile, the July foreclosure numbers show foreclosure starts increased on a year-over-year basis in 27 states, led by Connecticut, New Jersey, Pennsylvania, Indiana and Massachusetts, which all happen to be judicial foreclosure states. In these states foreclosures were, in fact, put on hold while the settlement was worked out with the five major lenders. Those cases are now moving forward.

California posted the nation’s highest state foreclosure rate in July despite an 11 percent decrease in foreclosure activity from the previous month and a 25 percent drop from July 2011. One in every 325 California housing units had a foreclosure filing during the month, more than twice the national average.

The state where the foreclosure problem is almost non-existent is North Dakota, where the oil and gas boom has transformed the economy. In July, there were only three foreclosure filings in the entire state, for a rate of one in 105,833 housing units.

For the second month in a row, the number of foreclosure filings increased in June compared with the same month a year ago. Except for the people living in those homes, that might be a good thing, analysts say.

RealtyTrac, which issues a monthly accounting of all U.S. foreclosure filings, reports California had the biggest spike in June foreclosure starts -- up 18 percent over June 2011.

Catching up

“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,” said RealtyTrac CEO Brandon Moore. “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.”

In fact, Moore believe banks will actively seek out short sales, becoming more cooperative than they have in the past. Not only do they usually lose less money on a short-sale, it's neater, cleaner, and takes less time to clear the books.

Now that lenders have settled a major base with the states and the federal government over past foreclosure practices, they are eager to begin clearing the backlog of distressed properties and real estate analysts say that can only help the market in the long run.

Could housing lead the recovery?

There are those who believe this increase in distressed properties on the market will not hurt home values because it coincides with a recovery in housing demand. Bill Smead, CEO of Smead Capital Management, is among them.

In an interview with business news cable channel CNBC Smead said the housing market is “reviving,” and will help lift the overall economy, which is sagging in other areas. Interest rates are at historic lows and homes in many areas are the cheapest they've been since the 1980s. All that remains is for mortgage companies to increase lending to credit-worthy buyers.

While foreclosures may continue to increase over the next few months, they could see a sharp decline as problem homes work their way through the system. RealtyTrac forecasts 700,000 homes will have been repossessed by banks by the end of the year -- a 30 percent decline from the previous year.

There are two ways to look at the current state of foreclosures. On one hand, activity spiked between April and May, but is down on a year-over-year basis.

In its monthly report, foreclosure marketing firm RealtyTrac says foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 205,990 U.S. properties in May.

That's an increase of nine percent from April but when compared to May 2011, it's down four percent. It means the forecast surge in foreclosures, now that the multi-state settlement with mortgage lenders has been ratified, has yet to materialize.

“U.S. foreclosure activity has now decreased on a year-over-basis for 20 straight months including May, but the jump in May foreclosure starts shows that it’s going to be a bumpy ride down to the bottom of this foreclosure cycle,” said Brandon Moore, CEO of RealtyTrac.

Going foreward, Moore thinks we could see fewer foreclosures and more short sales. In a short sale, the homeowner is allowed to sell for less than the current mortgage balance, meaning the mortgage holder loses money.

An about-face

Mortgage servicers have been reluctant to do short sales in the past, but Moore says there has been a definite change in their thinking.

“Disposing of distressed homes by pre-foreclosure sale can also benefit lenders and servicers because pre-foreclosure homes sell at a higher average price point than bank-owned homes,” Moore said. “Our first quarter foreclosure sales report showed that the average price of a pre-foreclosure home was more than $27,000 higher than the average price of a bank-owned home — which quickly adds up given that there have been an average of 1.6 million nationwide foreclosure starts per year for the past five years.

In essence, banks have finally recognized that treating the problem of delinquent mortgages with short sales rather than bank repossessions can help them minimize their losses and also avoid taking on more REOs, which they then have to manage, maintain and market for sale.

If this trend actually holds up, it could be encouraging news for the housing market. Homes will sell for slightly more than they would have otherwise and avoid going to foreclosure, which often depresses the value of surrounding homes.

Recent data shows the price of the average home dipped in the first three months of 2012. The latest foreclosure data explains why.

Sales of homes that were in some stage of foreclosure or bank-owned accounted for 26 percent of all U.S. residential sales during the first quarter — up from 22 percent of all sales in the fourth quarter and up from 25 percent of all sales in the first quarter of 2011, according to Realtytrac, an online foreclosure marketplace.

Distressed properties - foreclosures and short-sales - usually sell at a substantial discount to similar properties. As distressed sales increase, it brings down the average sale price. While lenders have, until now, been reluctant to approve short-sales at bargain basement prices, there's no evidence they've changed their view. Short-sales were up and prices were down.

Rising sales

Third parties purchased a total of 233,299 residential properties in some stage of pre-foreclosure (defaults and scheduled foreclosure auctions) or bank-owned (REO) during the first quarter, an increase of eight percent from the previous quarter and virtually unchanged from the first quarter of 2011.

The average sales price of homes in foreclosure or bank owned was $161,214 in the first quarter, down one percent from the previous quarter and down two percent from the first quarter of 2011. That average sales price was 27 percent below the average sales price of homes not in foreclosure or bank-owned during the quarter — matching a 27 percent foreclosure discount in the previous quarter but down from a 29 percent foreclosure discount in the first quarter of 2011.

“Foreclosure-related sales picked up in the first quarter, particularly pre-foreclosure sales where a distressed homeowner is selling to avoid foreclosure — typically via short-sale,” said Brandon Moore, chief executive officer of RealtyTrac. “Those pre-foreclosure sales hit a three-year high in the first quarter even as the average pre-foreclosure sales price dropped to a record low for our report. Lenders are approving more aggressively priced short sales, which in turn is resulting in more successful short sale transactions.

Some prices are rising

But that doesn't mean the value of all real estate is falling. Actually, the Realtytrac data shows the average price of a bank-owned home is stabilizing and even increasing in some areas where a slowdown in REO activity over the past year has resulted in a restricted supply of REO homes available.

“Still, REO sales did increase on a quarterly basis in 21 states, indicating that lenders are still working through a bottleneck of unsold REO inventory in many areas,” Moore said.

Third parties purchased a total of 109,521 pre-foreclosure homes, up 16 percent from the previous quarter. Pre-foreclosure sales accounted for 12 percent of all sales during the first quarter, up from 10 percent of all sales in the previous quarter and nine percent of all sales in the first quarter of 2011.

The average pre-foreclosure sales price in the first quarter was the lowest quarterly average pre-foreclosure sales price in the history of the RealtyTrac foreclosure sales report, which tracks foreclosure sales back to the first quarter of 2005.

Though unemployment remains high and income growth slow, U.S. consumers appear to be doing a better job of keeping up with their mortgage payments and other bills.

The Mortgage Bankers Association reports the mortgage delinquency rate fell to its lowest level in four years in the first three months of the year. The percentage of payments at least 30 days behind fell from 7.58 percent to 7.4 percent. The rate has been as high as 10 percent, hitting that level in 2010.

“Mortgage delinquencies normally fall during the first quarter of the year, but the declines we saw were even greater than the normal seasonal adjustments would predict, so delinquencies are clearly continuing to improve," said Michael Fratantoni, MBA's Vice President of Research and Economics. "Newer delinquencies, loans one payment past due as of March 31, are down to the lowest level since the middle of 2007, indicating fewer new problems we will need to deal with in the future. The percentage of loans three payments or more past due, the loans that represent the backlog of problems that still need to be handled, is down to the lowest level since the end of 2008. Foreclosure starts are at their lowest level since the end of 2007."

Widespread improvement

The improvement in loan performance was widespread: only four states, Maryland, Delaware, New Jersey and Washington, experienced increases in their 90+ day delinquency rates. Forty one states had decreases in foreclosure starts and 22 states had decreases in the percentage of loans in foreclosure.

“Nationally, the percentage of loans in the process of foreclosure is up slightly, but that top-line figure covers up several important underlying trends," said Fratantoni. "First, the percentage of loans in foreclosure is up for prime and FHA loans. The percentage of subprime loans in foreclosure continues to fall as the subprime loans age and the problem loans are resolved one way or the other.

However, the percentages of loans in foreclosure for both FHA loans and prime fixed-rate loans are climbing and are just below all-time records.

Meanwhile, Standard & Poors and Experian jointly report all loans, with the exception of bank cards, saw a decrease in default rates for the fourth consecutive month.

The four types of loan that did see a decrease in their default rates posted their lowest rates since at least the end of the recent economic crisis, the report said. The national composite declined to 1.86 percent in April from its 1.96 percent March rate.

Continuing a positive trend

"April data show the continuation of the positive trend we saw in the first quarter of 2012," said David M. Blitzer, Managing Director and Chairman of the Index Committee for S&P Indices. "Not only have we continued the general downward trend in consumer default rates that began in the spring of 2009, but we appear to be reaching new lows across many of the loan types."

Blitzer says the first four months of 2012 show broad based declines in default rates with first and second mortgage, auto and composite default rates all reaching new post-recession lows.

As predicted, first-time foreclosure starts increased in March, but not by much. Foreclosures were up 8.1 percent from the month of February, but down more than 31 percent from March 2011, according to a report by Lending Processing Services (LPS).

Housing analysts have predicted a surge in foreclosures now that the states and federal government have settled mortgage abuse charges with the industry's five largest lenders. Many foreclosures had been put on hold until the matter was settled.

But the LPS numbers present a mixed picture. Yes, March foreclosure starts hit a five month high. But in spite of that, the number was still far below those seen throughout much of 2011 and all of the previous three years.

The LPS report also shows the national foreclosure inventory stayed relatively stable in March, remaining at the historically high levels maintained since the end of 2010. But the inventory varies widely state to state, and this may account for the mixed picture. In “judicial process” states, where foreclosures must go through the court system, the inventory rate is 6.5 percent. In non-judicial states, the rate is much lower – 2.45 percent.

Most action expected in judicial states

It has primarily been in judicial states that the process came to a halt while the settlement was worked out. Now that the settlement has been approved, we can expect to see the backlog of foreclosures quickly pick up in those 23 states.

The LPS also confirmed an Equifax report this week that mortgage delinquencies have continued to decline, reaching their lowest level since August 2008, with seriously delinquent inventory - loans more than 90 days delinquent - declining in both judicial and non-judicial foreclosure states. That suggests that the current crop of homeowners are having less difficulty making their payments each month.

The rate of new problem loans, seriously delinquent loans that were current six months ago, also continues to improve nationally, in both judicial and non-judicial states. At the same time, the LPS March mortgage performance data did show that foreclosure sales continued to behave somewhat erratically, dropping to their lowest level since December 2010, and most sharply in non-judicial states.

The total mortgage delinquency rate in March was 7.09 percent, down 6.3 percent from February. The total U.S. foreclosure pre-sale inventory rate was 4.14 percent, down slightly from February.

The states with the highest percentage of non-current loans are Florida, Mississippi, New Jersey, Nevada and Illinois. States with the lowest percentage of non-current loans are Montana, Alaska, South Dakota, Wyoming and North Dakota.

In the first three months of 2012, there were 572,928 foreclosure filings -- everything from default notices, scheduled auctions and bank repossessions. According to RealtyTrac, a company that markets foreclosed properties, that's down two percent from the previous quarter and off 16 percent from the first quarter of 2011.

But don't take that as a sign that the housing market has kicked into recovery mode -- it hasn't.

"The low foreclosure numbers in the first quarter are not an indication that the massive reservoir of distressed properties built up over the past few years has somehow miraculously evaporated," said Brandon Moore, chief executive officer of RealtyTrac. "There are hairline cracks in the dam, evident in the sizable foreclosure activity increases in judicial foreclosure states over the past several months, along with an increase in foreclosure starts in many judicial and non-judicial states in March.

"The dam may not burst in the next 30 to 45 days, but it will eventually burst, and everyone downstream should be prepared for that to happen -- both in terms of new foreclosure activity and new short sale activity."

More homes headed for the market

What's happening, according to RealtyTrac, is that banks are preparing to foreclose on properties that are in default, after postponing that action while federal and state regulators worked out a settlement deal with major lenders. Now that the settlement is done, the market could be flooded with distressed properties for sale.

It's already beginning to happen in states that use the judicial foreclosure process. It was in those states where robo-signing and other abuses came to light, resulting in the lender settlement with states and the federal government. With the settlement signed, those states are beginning to clear the backlog of distressed homes.

RealtyTrac found that these judicial states posted some of the biggest year-over-year increases in foreclosure activity in the first quarter. Foreclosure filing were up 45 percent in Indiana, up 38 percent in Connecticut, up 26 percent in Massachusetts, Florida and South Carolina, and up 23 percent in Pennsylvania.

Meanwhile, 20 non-judicial states registered year-over-year decreases in foreclosure activity, led by Arkansas, with a 79 percent drop, and Nevada, with a 62 percent drop.

Next move

But RealtyTrac says there are still plenty of distressed homes in those states. What happens when they hit the market is anyone's guess.

The impact, in large part, will be determined by how many buyers are ready and willing to scoop up bargain-priced homes when they come on the market. Recent indicators have been slightly encouraging.

Investors have been consistently active in the market, making about 30 percent of home purchasesw each month. As rents continue to rise and home prices continue to dip, investing in real estate becomes a more attractive option.

There was more evidence today the housing market is far from being out of the woods. The national mortgage delinquency rate - the rate of borrowers 60 or more days past due - increased for the first time since the end of 2009, edging upward to 5.88 percent at the end of the third quarter, according to TransUnion.

The credit reporting agency issues a series of reports on credit-active consumers that track how they are managing mortgages, credit cards and auto loans.

"Until this quarter, we had seen six straight quarters where progressively more people were able to make their mortgage payments on time. We expected that trend to continue given recent, relatively more conservative lending policies and the apparent stabilization of both home values and unemployment," said Tim Martin, group vice president of U.S. Housing in TransUnion's financial services business unit.

"However, in the third quarter, the consumer was hit with several unanticipated shocks, including the U.S. credit rating downgrade, stock price declines, European debt concerns, stubbornly high unemployment, more downward pressure on home values and low consumer confidence. All of this affects a borrower's net worth and desire, or ability, to continue making house payments -- especially if they are facing negative equity in their homes due to price depreciation."

Loss of income

An anemic economy, however, may be a bigger reason. As homeowners continue to lose jobs, they tend to fall behind on the credit obligations.

“I lost my job 2 years ago,” Melissa, of Statesboro, Ga., told ConsumerAffairs.com. “Immediately after filing unemployment we contacted Bank of America to let them know and to see if there was any type of assistance. After several months of getting the run around, we were told that we did indeed qualify for loan modification and that the papers were in the mail. We never recieved the paperwork and by the time I started working again part time, they said I was making too much money and could not get assistance. We were already seven months behind at that point, then it moved into foreclosure process.”

A loss of income also caused Rich, of Oklahoma City, Okla., to fall behind on his mortgage last month.

“I called Vanderbilt (Mortgage) today about my payment that will be behind a month and 15 days on the 31st of October,” Rich said at the end of last month. “They told me that I either make a payment by that date or they will cancel all extensions and the full amount will be due.”

National trend

These stories have been repeated nationwide. According to TransUnion, between between the second and third quarters of 2011, all but 10 states and the District of Columbia experienced increases in their mortgage delinquency rates.

The nation's cities have been particularly hard hit. Sixty-four percent of metropolitan areas saw increases in their mortgage delinquency rates in the third quarter.

TransUnion says it's a significant difference compared to the second quarter of 2011 when only 21 percent of metropolitan statistical areas (MSA) experienced a rise. In the first quarter of 2011, 32 percent of MSAs experienced an increase.

This could be bad news for the real estate industry, which has begged the mortgage industry to loosen it's ever-tightening lending standards a bit. Statistics showing borrowers having a difficult time repaying loans isn't likely to inspire banker confidence.

TransUnion, meanwhile, believes the increase in delinquency is not a long-term trend. After a quarter or two, the company said it expects the delinquency rate to drift lower again in 2012.

For weeks now, some brave contrarians have dared to suggest real estate might be beginning to turn around. While the news from that sector hasn't exactly been good, they say, it's been less awful. In other words, it's beginning to look like a bottom.

RealtyTrac today supplied some more less-awful news about the real estate market. The foreclosure marketer reports that foreclosure activity hit a 44-month low in July.

Foreclosure filings — which include default notices, scheduled auctions and bank repossessions — were reported on 212,764 U.S. properties in July, a four percent decrease from June and a 35 percent decrease from July 2010. The report also shows one in every 611 U.S. housing units with a foreclosure filing during the month of July.

“July foreclosure activity dropped 35 percent from a year ago, marking the 10th straight month of year-over-year decreases in foreclosure activity and the lowest monthly total since November 2007,” said James J. Saccacio, chief executive officer of RealtyTrac.

Not so fast

Wait a minute, skeptics are sure to say. Remember the robo-signing controversy that caused lenders to slam on the brakes when it comes to foreclosures? Aren't there millions of homes just waiting for a foreclosure notice?

True, but Saccacio says this delay just might prevent some of these impending foreclosures from ever taking place.

“It appears that the foreclosure processing delays, combined with the smorgasbord of national and state-level foreclosure prevention efforts — including loan modifications, lender-borrower mediations and mortgage payment assistance for the unemployed — may be allowing more distressed homeowners to stave off foreclosure,” he said.

To be clear, Saccacio said he is not suggesting the market is about to rebound. After all, he notes, this decline in foreclosure is not based on a recovering economy. If it were, that would be a cause for celebration. He sees the current housing market woes extending into next year and beyond.

“A stabilizing economy and improving job market are the long-term keys to a housing market recovery," he said.

Location, location, location

Meanwhile, housing continues to suffer in some areas of the country much more than others. Ten states accounted for 73 percent of U.S. foreclosure activity in July, led by California, where 56,193 properties had a foreclosure filing during the month — up four percent from the previous month but still down 16 percent from July 2010. Initial default notices in California were down 6 percent from the previous month, but REOs increased on a month-over-month basis for the second straight month and scheduled auctions were up 11 percent from the previous month.

There were a total of 22,377 Florida properties with foreclosure filings in July, down six percent from June and down 57 percent from July 2010. Initial default notices and scheduled auctions in Florida were both down on a monthly and annual basis in July, while REO activity increased eight percent from June but was still down 55 percent from July 2010. The month-over-month REO increase in July followed monthly increases in initial default notices and scheduled auctions in June.

An 18 percent monthly increase in foreclosure activity helped Georgia post the nation’s third highest foreclosure activity total in July. There were a total of 11,461 Georgia properties with foreclosure filings during the month, still down nine percent from July 2010. The overall increase in Georgia foreclosure activity was driven largely by a 25 percent month-over-month increase in REO activity.

Michigan foreclosure activity in July decreased 16 percent from the previous month and was down 42 percent from July 2010, but the state still documented the fourth highest state foreclosure activity total for the month — 10,894 properties with foreclosure filings.

Illinois REO activity increased 20 percent from the previous month, and the state documented a total of 10,627 properties with foreclosure filings in July. Texas REO activity increased 15 percent from the previous month, and the state documented a total of 10,571 properties with foreclosure filings during the month.

Other states with foreclosure activity totals among the nation’s 10 highest in July were Arizona (10,098), Nevada (9,930), Ohio (8,376) and Wisconsin (4,534).

Chances are you haven't heard of a company called ReconTrust. Unless your home happens to be in foreclosure.

ReconTrust is a subsidiary of Bank of America (BOA) and is supposed to be an impartial foreclosure trustee when a mortgage goes into default. But Washington State Attorney General Rob McKenna charges ReconTrust has repeatedly broken the law since the beginning of the foreclosure crisis.

McKenna has sued the BOA subsidiary, claiming it “has failed to comply with the Washington Deed of Trust Act, RCW 61.24, in each and every foreclosure it has conducted since at least June 12, 2008.” The company is also accused of violating the state’s Consumer Protection Act.

Ignored warnings

“ReconTrust ignored our warnings, repeatedly broke the law and refused to provide information requested during our investigation,” McKenna said. “ReconTrust’s illegal practices make it difficult, if not impossible, for borrowers who might have a shot at saving their homes to stop those foreclosures.”

ReconTrust is a foreclosure trustee that is legally required to act as a neutral party on behalf of both the lender and the borrower while conducting foreclosure proceedings in good faith and in accordance with the law.

McKenna discussed the suit at a news conference held in front of a foreclosed Seattle home. Foreclosed homeowners and a number of private attorneys also voiced their concerns.

“My home is being foreclosed on. The situation has caused great pain for my son and myself,” said Myra Cole, a single mother from Spanaway who said she struggled to find employment after a layoff.

Her loan servicer was reviewing her Spanaway, Wash., home for a loan modification when ReconTrust sold the house at foreclosure.

Got the runaround

“I couldn’t understand how this could have happened,” Cole said. “I got the run-around. I just can’t believe that the company that’s supposed to be helping me is foreclosing on me. We are trying to save our homes. We’re doing the steps they tell us. In the end, it’s all for nothing. It’s an injustice.”

Ruby Barrus told a similar story about the home where she and her husband live in Marysville,” Wash. During a time of financial hardship, their loan servicer promised not to foreclose while they worked out a loan modification.

“Our payments were never late,” Barrus said, adding that they only stopped making payments because the bank indicated they needed to default to qualify for the modification. “We just figured they knew what they were doing because they were our servicer. … Months later, we get a letter from ReconTrust saying they’re our foreclosure attorneys. We had never heard of them.”

Both women are in court battles to keep their homes.

No local office

McKenna said an essential requirement of the Deed of Trust statute is that a trustee maintains an office in the state where homeowners can go to ask questions, make last-minute payments and request a foreclosure be postponed for a legitimate reason. But ReconTrust doesn’t have an office in Washington.

“ReconTrust’s claim that the company doesn’t have to follow Washington law and procedures because it is a national bank is wrong,” McKenna added.

McKenna's suit contains a laundry list of allegations against the firm, claiming it failed to identify the actual owner of the promissory notes being foreclosed, provided confusing information regarding how borrowers defaulted and how they can cure that default.

The suit also charges ReconTrust failed to conduct foreclosures in a public place, instead holding them at private sites, including an office park in Bellevue. It says the company created or permitted the use of documents that were improperly executed, notarized or sworn to.

'Failed to exercise its duty'

Finally, the suit charges ReconTrust failed to exercise its duty of good faith toward the borrower by deferring solely to the lender when deciding whether to postpone a foreclosure.

Based on information obtained during its investigation, the Attorney General’s Office estimates that ReconTrust has issued 9,900 foreclosure notices since January 2008 in three Washington counties alone. ReconTrust forecloses across the state. 

It's unknown how many foreclosures may have been prevented had ReconTrust complied with laws, McKenna said.

In May 2010, the Attorney General’s Consumer Protection Division began investigating reports of lenders and trustee services not properly reviewing foreclosure documents or following other legal procedures.

McKenna sent letters in October 2010 and April 2011, outlining concerns and calling on trustees to suspend questionable foreclosures in the state. The office is investigating more than a dozen other trustees for suspected violations.

Meanwhile, private lawsuits against ReconTrust have been filed in Utah, Nevada, California, Oregon and Arizona concerning its role in foreclosures in those states, as well as by private attorneys in Washington.  The Attorney General of Utah sent a public letter to Bank of America threatening suit if ReconTrust continued to violate Utah foreclosure law.

Last month's foreclosure filings, as counted by foreclosure marketer RealtyTrac, hit the lowest point in four years. Is the housing crises over?

Hardly.  Banks are still overloaded with bad loans, but RealtyTrac says they are simply waiting before beginning the foreclosure process.

“Foreclosure processing delays continue to mask the true face of the foreclosure situation,” said James J. Saccacio, RealtyTrac’s CEO. “Even at a significantly lower level than a year ago, the new supply of REOs exceeds the amount being sold each month.”

By RealtyTrac's count, a total of 214,927 properties received default, auction or repossession notices last month. That's the lowest number since November 2007. Filings dropped 33 percent from a year earlier and 2 percent from April. One in 605 households got a notice in May.

This is part of a year-long trend. Foreclosure filings have fallen in the last eight straight months, following revelations that loan servicers broke rules by using robo-signers to process foreclosure documents. Banks began slamming on the brakes as they retooled their in-house processes.

Weak demand

Something else may be a work. There is such weak demand from buyers, banks may feel it is self-defeating to place even more foreclosed properties on the market. At some point, however, most industry analysts expect these homes to be put up for sale.

Meanwhile, an estimated 28 percent of mortgage-holders are now underwater on their loans, meaning they owe more than the house is worth. These homeowners are in the greatest danger of foreclosure, since they have little motivation to hold on.

High unemployment is also putting added pressure on homeowners, many of whom find they can no longer afford to make their payments.

As real estate is all about location, the foreclosure crisis continues to be centered in the same handful of states. Nevada had the highest rate of foreclosure per household again last month, with one in 103 getting a notice. Arizona was second, followed by California, Michigan, Utah, Georgia, Idaho, Florida, Illinois and Colorado.

For over a year, between one-quarter and one-third of all U.S. home sales have been foreclosures, according to RealtyTrac, an online foreclosure marketing firm. As you might expect, that is having a depressing effect on values.

In it's report on the first quarter of 2011, RealtyTrac said the average sales price of properties in some stage of foreclosure — default, scheduled for auction or bank-owned (REO) — was $168,321, down 1.89 percent from the fourth quarter of 2010 and down 1.46 percent from the first quarter of 2010.

Homes in foreclosure were 27 percent cheaper than homes not in foreclosure, making it much harder for homeowners to sell their homes. Still, overall prices appear to be more stable than in quarters past.

Delaying the recovery

“While foreclosure sales continue to account for an unusually high percentage of all residential home sales, sales volume is well off the peak we saw in the first quarter of 2009, when nearly 350,000 foreclosure properties sold to third parties,” said James J. Saccacio, chief executive officer of RealtyTrac. “While this is probably helping to keep home prices relatively stable, it is also delaying the housing recovery. At the first quarter foreclosure sales pace, it would take exactly three years to clear the current inventory of 1.9 million properties already on the banks’ books, or in foreclosure.”

Some cities, of course, have more foreclosures than others. These tend to be markets where home prices escalated during the housing bubble.

Nevada, California still hard hit

In Nevada, for example, foreclosure sales accounted for 53 percent of all residential sales in the first quarter, the highest percentage of any state but down from nearly 54 percent of all sales in the previous quarter and down from 59 percent of all sales in the first quarter of 2010.

The average foreclosure sales price in Nevada during the first quarter was nearly 18 percent below the average sales price of homes not in foreclosure. Bank-owned properties that sold in the first quarter had been repossessed by the bank an average of 130 days prior to sale, while properties that sold in the earlier stages of foreclosure were in foreclosure an average of 135 days before selling.

California foreclosure sales accounted for 45 percent of all residential sales in the state during the first quarter, up from 43 percent of all sales in the fourth quarter but down from nearly 48 percent of all sales in the first quarter of 2010.

The average foreclosure sales price in California was nearly 34 percent below the average sales price of homes not in foreclosure. California bank-owned properties that sold in the first quarter had been repossessed by the bank an average of 164 days prior to sale, while properties that sold in the earlier stages of foreclosure were in foreclosure an average of 156 days before selling.

Some optimism

Despite the negative numbers, some analysts in recent days have begun to sound a note of optimism about housing. This week, for example, Yahoo! ecnomics editor Daniel Gross offered the contrarian view that we could be on the cusp of a “housing boom.” He points to demographic data that suggest household formation alone will require construction of more than one million new homes a year over a ten year period.

“Unless we start picking up the pace of new-home construction, and soon, the U.S. could face a housing shortage in the not-too-distant future,” Gross writes. “That's the line coming from one of the most sober, data-driven, non-ideological sources I know: Macroeconomic Advisers.”

Investors, many of whom are making all-cash purchases, appear to be driving the housing market at the moment, and they are also among the more optimistic about the sector.

A recent survey by the online real estate firm Move Inc., showed investors are among the most bullish about the outlook for housing. The reasons they give? You can buy and fix up a home for very little money, and there's little competition from traditional buyers, who are either uninterested or can't get the financing.

Foreclosure filings — default notices, scheduled auctions and bank repossessions — fell nine percent from March and were down 34 percent from April 2010, according to RealtyTrac, a foreclosure marketing firm.

But that doesn't mean the housing market is recovering or that fewer homeowners are in trouble. Other evidence suggests otherwise. Instead, says RealtryTrac, it means the process has simply slowed down.

“Foreclosure activity decreased on an annual basis for the seventh straight month in April, bringing foreclosure activity to a 40-month low,” said James J. Saccacio, chief executive officer of RealtyTrac. “This slowdown continues to be largely the result of massive delays in processing foreclosures rather than the result of a housing recovery that is lifting people out of foreclosure.”

Delays

The first delay occurs between delinquency and foreclosure, when lenders and services are no longer automatically pushing loans that are more than 90 days delinquent into foreclosure but are waiting longer to allow for loan modifications, short sales and possibly other disposition alternatives. Data from the Mortgage Bankers Association shows that about 3.7 million properties are in this seriously delinquent stage.

The second delay occurs after foreclosure has started, when lenders are taking much longer than they were just a few years ago to complete the foreclosure process. According to RealtyTrac, foreclosure actions were reported on 219,258 U.S. properties in April, with one in every 593 U.S. housing units receiving a foreclosure filing during April.

In 2007, it took an average of only 151 days for a foreclosure process to be completed and a repossessed home to be placed back on the market. In April, the average time lengthened to 400 days.

Mortgage servicers have slowed the process in the wake of last year's “robo-signing” scandal, when several big firms were caught taking illegal short-cuts. Not only are they now being more deliberate, they are slowing the number of distressed properties coming on the market, which may prove to be helpful in stabilizing the housing market.

Nevada, Arizona, California still the hardest hit

Though the process has slowed, the states with the highest number of foreclosures remains pretty much the same. Nevada posted the nation’s highest state foreclosure rate for the 52nd straight month in April, with one in every 97 housing units receiving a foreclosure filing during the month. Overall foreclosure activity in Nevada decreased nine percent from the previous month and was down 27 percent from April 2010.

Arizona repossessions decreased three percent from March but were still up 22 percent from April 2010, helping the state maintain the nation’s second highest foreclosure rate for the fifth consecutive month. One in every 205 Arizona housing units received a foreclosure filing during the month, and overall foreclosure activity decreased 15 percent from March and was down 17 percent from April 2010 despite the year-over-year jump in REOs.

Overall, foreclosure activity in California was down monthly and annually in April, but a 22 percent month-over-month jump in REOs helped keep the state’s foreclosure rate at the third highest among all states for the sixth consecutive month. One in every 240 California properties received a foreclosure filing in April.

There was some good news today about consumers' economic situation, in a report showing the number of homeowners who have fallen behind of mortgage payments actually declined in the last month of 2010.

The Mortgage Bankers Association released its report for the fourth quarter, showing the delinquency rate for mortgage loans on one-to-four-unit residential properties decreased to a seasonally adjusted rate of 8.22 percent of all loans outstanding as of the end of the fourth quarter of 2010. That's a decline of 91 basis points from the third quarter of 2010, and a decrease of 125 basis points from one year ago.

The non-seasonally adjusted delinquency rate decreased 46 basis points to 8.93 percent this quarter from 9.39 percent last quarter.

Across the board decrease

"These latest delinquency numbers represent significant, across the board decreases in mortgage delinquency rates in the U.S.," said Jay Brinkmann, MBA's chief economist.  "Total delinquencies, which exclude loans in the process of foreclosure, are now at their lowest level since the end of 2008."

Mortgages only one payment past due are now at the lowest level since the end of 2007, the very beginning of the recession.  Perhaps most importantly, loans three payments (90 days) or more past due have fallen from an all-time high delinquency rate of 5.02 percent at the end of the first quarter of 2010 to 3.63 percent at the end of the fourth quarter of 2010, a drop of 139 basis points or almost 28 percent over the course of the year.  Every state but two saw a drop in the 90-plus day delinquency rate and the two increases were negligible.

Foreclosures still working through the system

The percentage of loans on which foreclosure actions were started during the fourth quarter was 1.27 percent, down seven basis points from last quarter and up seven basis points from one year ago. The delinquency rate includes loans that are at least one payment past due but does not include loans in the process of foreclosure. 

The percentage of loans in the foreclosure process at the end of the fourth quarter was 4.63 percent, up 24 basis points from the third quarter of 2010 and up five basis points from one year ago. The serious delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 8.57 percent, a decrease of 13 basis points from last quarter, and a decrease of 110 basis points from the fourth quarter of last year.

The report suggests, at the very least, that current homeowners, those who haven't already lost their homes due to foreclosure, are better able to make their payments, despite stubbornly high unemployment .

"While delinquency and foreclosure rates are still well above historical norms, we have clearly turned the corner," Brinkman said.  "Despite continued high levels of unemployment, the economy did add over 1.2 million private sector jobs during 2010 and, after remaining stubbornly high during the first half of 2010, first time claims for unemployment insurance fell during the second half of the year.  Absent a significant economic reversal, the delinquency picture should continue to improve during 2011."

There were more foreclosure actions in January than in December, but when compared with January 2010, the pace is sharply lower. While it’s good news, it might not be as good as it seems.

The monthly report from RealtyTrac, an online marketplace for foreclosed properties, shows there were foreclosure actions of some type on 261,333 U.S. properties in January -- a one percent increase from the previous month but a 17 percent decrease from January 2010. The report also shows one in every 497 housing units received a foreclosure filing during the month.

While the long-term trend looks promising, RealtyTrac says the reason for the drop needs to be considered.

"We've now seen three straight months with fewer than 300,000 properties receiving foreclosure filings, following 20 straight months where the total exceeded 300,000," said James J. Saccacio, chief executive officer of RealtyTrac. "Unfortunately this is less a sign of a robust housing recovery and more a sign that lenders have become bogged down in reviewing procedures, resubmitting paperwork and formulating legal arguments  related to accusations of improper foreclosure processing."

Foreclosure activity by type

A total of 75,198 U.S. properties received default notices (NOD, LIS) in January, a one percent decrease from the previous month  and a 27 percent decrease from January 2010, the 12th straight  month where default notices decreased on a year-over-year basis.

January was also the fourth straight month where default notices decreased on a  month-over-month basis, giving it the lowest monthly total for default notices  since July 2007.

Foreclosure auctions (NTS, NFS) were scheduled for the first time on a total of 108,002 U.S. properties in January, a four percent decrease from the previous month and a 13  percent decrease from January 2010. It was the lowest monthly total for scheduled  foreclosure auctions since February 2009.

Lenders foreclosed on 78,133 U.S. properties in January, up 12 percent from the previous month but still down 11 percent from January 2010. Bank repossessions (REO) in non-judicial foreclosure states increased 23 percent from December but were still down nine percent from January 2010, while bank repossessions in judicial foreclosure states decreased seven percent from the previous month and were down 16 percent from January 2010.

Nevada, Arizona, California remain the leaders

The states hit hardest by foreclosure continue to struggle. Nevada bank repossessions increased 16 percent from the previous month, helping the state maintain the nation's highest state foreclosure rate for the 49th straight month, despite month-over-month decreases in default notices and scheduled auctions. One in every 93 Nevada housing units received a foreclosure filing in January -- more than five times the national average.

One in every 175 Arizona housing units received a foreclosure filing in January, the nation's second highest  state foreclosure rate. Arizona foreclosure activity increased 16 percent from the previous month, driven by a  54 percent month-over-month increase in REOs -- but was still down 25 percent  from January 2010.

California REO activity increased 32 percent from the previous month, and the state posted the nation's third highest state foreclosure rate, with one in every 200 housing units receiving a foreclosure filing.

Idaho posted the nation's fourth highest state foreclosure rate, with one in every 241 housing units receiving a foreclosure filing, while Utah posted the nation's fifth highest state foreclosure rate, with one in every 265 housing units receiving a foreclosure filing during the month.

Other states with foreclosure rates ranking among the top 10 in January were Michigan, Georgia, Illinois, Florida and Colorado.

Five states account for more than 50 percent of national total

With 67,072 properties receiving a foreclosure filing, California accounted for more than 25 percent of the national total in January. After hitting a 25-month low in November, California foreclosure activity has increased on a month-over-month basis for two straight months.

Florida foreclosure activity decreased on a month-over-month basis for the fourth straight month,  but the state's 21,671 properties receiving a foreclosure filing in January -- a 42-month low -- was still the second highest in the nation.

Michigan foreclosure activity increased for the second straight month, and the state posted the nation's third highest total, with 16,716 properties receiving a foreclosure filing in January.

Arizona posted the nation's fourth highest total, with 15,757 properties receiving a foreclosure filing, while Texas posted the nation's fifth highest total, with 14,897 properties receiving a foreclosure filing during the month.

With one in every 82 housing units receiving a foreclosure filing in January, the Las Vegas-Paradise, Nev., metro area maintained the nation's highest  foreclosure rate among metropolitan areas with a population of 200,000 or more.  Las Vegas foreclosure activity dropped nearly 13 percent from the previous month and increased less than one percent from January 2010.

The other Nevada metro area in the top 10 was Reno-Sparks, at No. 5 with one in every 132 housing units receiving a foreclosure filing.

Seven California metro areas posted foreclosure rates in the top 10, led by Modesto, at No. 2 with one in every 111 housing units receiving a foreclosure filing; Stockton, at No. 3 with one in every 114 housing units receiving a foreclosure filing; and Riverside-San Bernardino-Ontario, at No. 4 with one in every 120 housing units receiving a foreclosure filing. Other California metro areas with foreclosure rates in the top 10 were Vallejo-Fairfield at No. 6 (one in 135 housing units); Bakersfield at No. 7 (one in 143); Merced at No. 9 (one in 149); and Sacramento-Arden-Arcade-Roseville at No. 10 (one in 151). Sacramento was the only California  metro area in the top 10 to report increasing foreclosure activity on a month-over-month  and year-over year basis.

With one in every 143 housing units receiving a foreclosure filing in January, the Phoenix-Mesa-Scottsdale metro area posted the nation's eighth highest metro  foreclosure rate.

No Florida cities showed up in the top 20 metro foreclosure rates in January. In contrast the state accounted for nine of the top 20 metro foreclosure rates in 2010.

Foreclosure activity increased last year in 149 of the nation's 206 metropolitan areas with a population of 200,000 or more -- suggesting the foreclosure problem has yet to peak.

But the year-end report from RealtyTrac, a foreclosure marketing firm, also showed the metro areas with the 10 highest  foreclosure rates all posted decreasing foreclosure activity since2009. Six  of the top 10 also posted decreasing foreclosure activity from 2008. Analysts say that suggests stability may be returning to the hardest-hit markets.

"Foreclosure floodwaters receded somewhat in 2010 in the nation's hardest-hit housing markets," said James J. Saccacio, chief  executive officer of RealtyTrac. "Even so, foreclosure levels remained five to 10 times higher than historic norms in most of those hard-hit markets, where deep faultlines of risk remain and could potentially trigger more waves of  foreclosure activity in 2011 and beyond. Meanwhile foreclosures became more  widespread in 2010 as high unemployment drove activity up in 72 percent of the  nation's metro areas, many of which were relatively insulated from the initial  foreclosure tsunami."

The usual suspects

California, Florida, Nevada and Arizona cities accounted for 19 of the top 20  metro foreclosure rates, with Boise City-Nampa, Idaho the lone exception at No.  20. Boise also was one of only three metros in the top 20 where foreclosure  activity increased from 2009, along with the Florida metro areas of Deltona-Daytona Beach-Ormond Beach at No. 13 and Tampa-St.  Petersburg-Clearwater at No. 17.

Top 10 metro foreclosure rates

Las Vegas-Paradise continued to post the nation's highest metro foreclosure rate, with one in  every 9 housing units (10.88 percent) receiving a foreclosure filing in 2010 -- nearly five times the national average. A total of 88,198 Las Vegas-area  properties received a foreclosure filing in 2010, a decrease of 7 percent from  2009 but still up 31 percent from 2008.

Despite decreasing foreclosure activity from both  2009 and 2008, Cape Coral-Fort Myers, Fla., documented the nation's second highest metro  foreclosure rate -- with one in every 12 housing units (8.40 percent) receiving a  foreclosure filing in 2010. A total of 30,660 properties in the metro area  received a foreclosure filing in 2010, down 28 percent from 2009 and down 25  percent from 2008.

Modesto, Calif., also reported a decrease in  foreclosure activity from 2009 and 2008, but the metro area still posted the  nation's third highest metro foreclosure rate with one in every 14 housing  units (7.34 percent) receiving a foreclosure filing in 2010.

Along with Cape Coral-Fort Myers and Modesto, four other metro areas with foreclosure rates in the top 10 also reported two-year  decreases in foreclosure activity: No. 6 Riverside-San Bernardino-Ontario,  Calif., where foreclosure activity was down nearly 20 percent from 2009 and  nearly 10 percent from 2008; No. 7 Stockton, Calif., where foreclosure activity  was down nearly 19 percent from 2009 and nearly 25 percent from 2008; No. 8  Merced, Calif., where foreclosure activity was down nearly 31 percent from 2009  and 30 percent from 2008; and No. 10 Vallejo-Fairfield, Calif., where foreclosure  activity was down 12 percent from 2009 and 3 percent from 2008.

Other metro areas with foreclosure rates in the top 10 were Phoenix-Mesa-Scottsdale at No. 4 (7.27 percent); Miami-Fort Lauderdale-Pompano Beach at No. 5 (7.08  percent); and Orlando-Kissimmee at No. 9 (6.86 percent).

Foreclosure activity trends were evenly split in  the nation's 20 largest metro areas, with 10 of those metro areas showing  decreasing foreclosure activity from 2009, and 10 showing increasing  foreclosure activity from 2009.

At first the foreclosure wave was made up of subprime mortgages. People who couldn't really afford houses were given mortgages with very low introductory rates that adjusted several points higher a couple of years later.

If foreclosures were limited to that group, the crisis might not be as big as it is. But unfortunately, the foreclosure tsunami has rolled on to engulf a lot of homeowners with prime mortgages.

The evidence is contained in the latest mortgage delinquency report from the Mortgage Bankers Association (MBA). In many respects, the report is encouraging. The percentage of loans on which foreclosure actions were started during the third quarter was 1.34 percent, up from the previous quarter but lower than the third quarter of 2009.

The percentage of loans in the foreclosure process at the end of the third quarter was 4.39 percent, down from both the previous quarter and the same period a year ago. The seriously delinquent rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 8.70 percent, again, a decrease from both the previous quarter and the third quarter of 2009.

Mixed signals

That suggests that things are improving. However, the report also reveals that the foreclosure starts rate increased for all loan types and the foreclosure starts rate for prime fixed loans in particular set a new record high in the survey, as more loans entered the foreclosure process.

"Most often, homeowners fall behind on their mortgages because their income has dropped due to unemployment or other causes,” said Michael Fratantoni, MBA's Vice President of Research and Economics.

Although the employment report for October was relatively positive, the job market improved only marginally through the third quarter. While there was a small improvement in the delinquency rate, the level of that rate remains quite high, according to Fratantoni. 

"As we anticipate that the unemployment rate will be little changed over the next year, we also expect only modest improvements in the delinquency rate,” he said.

Foreclosure paperwork mess

Fratantoni said the foreclosure paperwork issues announced by several large servicers in late September and early October are unlikely to have had a large impact on the third quarter numbers, but may well increase the foreclosure inventory numbers in the fourth quarter of 2010 and in early 2011.  The foreclosure inventory rate captures loans from the point of the foreclosure referral to exit from the foreclosure process, either through a cure like a modification, a short sale or deed in lieu, or through a foreclosure sale. 

The servicers that halted foreclosure sales temporarily may show higher foreclosure inventory numbers in the fourth quarter of 2010 and in early next year than would otherwise have been the case.  Any drop in foreclosure sales over the next few quarters may actually reduce the inventory of homes on the market, with almost four million properties currently listed.  However, these foreclosed homes are likely to come on the market in the medium term, so it is only a delay rather than a change in the underlying economics.

By Mark Huffman
ConsumerAffairs.Com

August 26, 2010

Homeowners are still having trouble paying their mortgage, but not quite as much trouble as earlier this year, according to a report from the Mortgage Bankers Association.

In its report on the second quarter of 2010, the MBA found that 9.85 of all loans outstanding were delinquent, meaning nearly one in ten mortgage holders had missed at least one payment. While troubling, its a decrease of 21 basis points from the first quarter of 2010, but an increase of 61 basis points from one year ago.

The percentage of loans on which foreclosure actions were started during the second quarter was 1.11 percent, down 12 basis points from last quarter and down 25 basis points from one year ago.

The delinquency rate includes loans that are at least one payment past due but does not include loans in the process of foreclosure. The percentage of loans in the foreclosure process at the end of the second quarter was 4.57 percent, a decrease of six basis points from the first quarter of 2010, but an increase of 27 basis points from one year ago.

The combined percentage of loans in foreclosure or at least one payment past due was 13.97 percent on a non-seasonally adjusted basis, a four basis point decline from 14.01 percent last quarter.

The seriously delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 9.11 percent, a decrease of 43 basis points from last quarter, but an increase of 114 basis points from the second quarter of last year.

The numbers suggest that 2010 is a worse year for foreclosures than 2009, but that the trend has improved slightly in recent months. The question is whether that trend will continue or worsen if the economy slips into a double-dip recession.

Reversal of recent trends

These latest delinquency numbers contain a mixture of somewhat good news and somewhat bad news, said Jay Brinkmann, MBAs chief economist. The good news is that foreclosure starts are down and the inventory of homes anywhere in the process of foreclosure fell for the first time since 2006 and had the largest drop since 2005. Loans 90 days or more past due, the largest share of delinquent loans, also fell. The fact that both the 90 plus delinquency rate fell and the foreclosure start rate fell means that a significant number of these seriously delinquent loans have been successfully modified and reclassified as performing, current loans.

Offsetting that good news is the fact that, after declining since the beginning of 2009, the rate of short-term delinquencies is going up and the increase in these short-term delinquencies may ultimately drive the foreclosure measures back up.

The percent of loans one payment behind had peaked in the first quarter of 2009 at 3.77 percent and fell to 3.31 percent by the end of 2009, Brinkmann said. Ultimately the housing story, whether it is delinquencies, homes sales or housing starts, is an employment story. Only when we see a consistent increase in employment will we see an increase in sales and starts, and a sustained improvement in the delinquency numbers. Until we see the increase in the number of households that comes with an increase in the number of paychecks, all measures of the health of the housing industry will continue to be weak.

Foreclosure filings increased four percent in July from the previous month, but unless your home is in one of five states, your chance of being affected is less.

In its July report, the real estate data firm RealtyTrac notes that foreclosure activity continues to be centered in California, Florida, Illinois, Michigan and Arizona, with those five states accounting for more than half of all U.S. foreclosure activity last month.

California alone accounted for 21 percent of the national total in July, with 66,910 properties receiving a foreclosure filing during the month -- down three percent from the previous month and down 38 percent from July 2009.

With 51,557 properties receiving a foreclosure filing during the month, Florida accounted for 16 percent of the national total in July despite a nearly nine percent decrease in foreclosure activity from July 2009.

Illinois foreclosure activity increased 33 percent from the previous month -- the biggest monthly increase among states with top 10 foreclosure rates. A total of 19,602 Illinois properties received a foreclosure filing in July, the third highest state total and accounting for six percent of the national total.

Michigan accounted for just under six percent of the national total, with 18,833 properties receiving a foreclosure filing in July, and Arizona accounted for five percent of the national total, with 16,298 properties receiving a foreclosure filing in July.

Repossessions up six percent

Despite the month over month increase in foreclosure activity, RealtyTrac notes that foreclosure filings are down ten percent from July 2009. But that doesn't mean people have stopped losing their homes. In fact, that grim statistic continues to rise.

"July marked the 17th consecutive month with a foreclosure activity total exceeding 300,000," said James J. Saccacio, chief executive officer of RealtyTrac. "Declines in new default notices, which were down on a year-over-year basis for the sixth straight month in July, have been offset by near-record levels of bank repossessions, which increased on a year-over-year basis for the eighth straight month."

When it comes to the rate of foreclosure, two smaller states -- Nevada and Idaho -- make the top five. In Nevada, nearly one in every 82 housing units receiving a foreclosure filing in July. Nevada continued to document the nation's highest foreclosure rate for the 43rd straight month.

Foreclosure activity in Idaho increased nearly 19 percent from the previous month, boosting the state's foreclosure rate to fifth highest among all the states. One in every 240 Idaho housing units received a foreclosure filing in July.

Metro foreclosure hot spots

All 10 metro areas with the nation's highest foreclosure rates in July posted year-over-year decreases in foreclosure activity, but five of the top 10 posted increases from the previous month. The two biggest monthly increases were in No. 2 Cape Coral-Fort Myers, Fla., where foreclosure activity was up 21 percent from the previous month, and in No. 9 Phoenix-Mesa-Scottsdale, Ariz., where foreclosure activity was up 19 percent from the month before.

Foreclosure activity increased nearly nine percent from the previous month in the Las Vegas-Paradise, Nev., metro area, which registered the highest foreclosure rate among metropolitan areas with a population of 200,000 or more. One in every 71 Las Vegas housing units received a foreclosure filing in July, more than five times the national average.

Other states with foreclosure activity totals among the nation's 10 highest in July were Nevada (13,727), Ohio (13,511), Georgia (12,577), Texas (11,727) and Maryland (6,961).

July 15, 2010
For those judging the health of the housing market by the number of foreclosures, there may be a bit of good news, tempered with a nagging concern.

In a report covering the first half of 2010, the foreclosure listing firm RealtyTrac says the number of foreclosure filings was up eight percent over the first half of 2009, but were down five percent from the previous six months.

The company's Midyear 2010 U.S. Foreclosure Market Report shows a total of 1,961,894 foreclosure filings -- default notices, auction sale notices and bank repossessions -- were reported on 1,654,634 U.S. properties in the first six months of 2010.

The report also shows that 1.28 percent of all U.S. housing units (one in 78) received at least one foreclosure filing in the first half of the year. It signals a definite slowdown in foreclosures.

Foreclosure filings were reported on 313,841 U.S. properties in June, a decrease of nearly three percent from the previous month and a drop of nearly seven percent from June 2009. June was the sixteenth straight month where the total number of properties with foreclosure filings exceeded 300,000.

Foreclosure filings were reported on 895,521 U.S. properties during the second quarter, a decrease of nearly four percent from the previous quarter and an increase of less than one percent from the second quarter of 2009. Default and auction notices were down on a quarter-over-quarter and year-over-year basis in the second quarter, but bank repossessions (REOs) increased five percent from the previous quarter and 38 percent from Q2 2009 to 269,962 -- a new quarterly high for the report.

Two trends

"The second quarter was a tale of two trends," said James J. Saccacio, chief executive officer of RealtyTrac. "The pace of properties entering foreclosure slowed as lenders pre-empted or delayed foreclosure proceedings on delinquent properties with more aggressive short sale and loan modification initiatives. Meanwhile the pace of properties completing the foreclosure process through bank repossession quickened as lenders cleared out a backlog of distressed inventory delayed by foreclosure prevention efforts in 2009."

According to Saccacio, the midyear numbers put the U.S. housing market on pace to exceed three million properties with foreclosure filings by the end of the year, and more than 1 million bank repossessions. But for the housing market to improve, there needs to down a downward trend in foreclosures, indicating a return of stability. To date, that hasn't happened.

"The roller coaster pattern of foreclosure activity over the past 12 months demonstrates that while the foreclosure problem is being managed on the surface, a massive number of distressed properties and underwater loans continues to sit just below the surface, threatening the fragile stability of the housing market," Saccacio said.

Nevada, Arizona, Florida post top state foreclosure rates

Nearly six percent of all Nevada housing units (one in 17) received at least one foreclosure filing in the first half of 2010, giving Nevada the nation's highest foreclosure rate during the six-month period despite decreasing foreclosure activity. A total of 64,429 Nevada properties received a foreclosure filing from January to June, a decrease of 13 percent from the previous six months and a decrease of 6 percent from the first six months of 2009.

Arizona registered the nation's second highest state foreclosure rate in the first half of 2010, with 3.36 percent of its housing units (one in 30) receiving a foreclosure filing, and Florida registered the nation's third highest state foreclosure rate, with 3.15 percent of its housing units (one in 32) receiving a foreclosure filing during the six months.

Other states with foreclosure rates ranking among the nation's 10 highest were California (2.54 percent), Utah (1.91 percent), Georgia (1.79 percent), Michigan (1.73 percent), Idaho (1.68 percent), Illinois (1.61 percent), and Colorado (1.40 percent).

California, Florida, Arizona post highest foreclosure totals

A total of 340,740 California properties received a foreclosure filing in the first half of 2010, the nation's highest total but down 15 percent from the previous six months and down nearly 13 percent from the first six months of 2009.

With 277,073 properties receiving a foreclosure filing in the first six months of 2010, Florida documented the second highest state total. First-half foreclosure activity in Florida decreased nearly 9 percent from the previous six months but increased three percent from the first half of 2009.

Arizona's 91,484 properties receiving a foreclosure filing in the first six months of 2010 was the third highest state total even though the state's foreclosure activity decreased nearly two percent from the previous six months. Arizona foreclosure activity in the first half of 2010 was still up nearly two percent from the first half of 2009.

Other states with first-half totals among the 10 highest in the country were Illinois (85,223), Michigan (78,509), Georgia (71,949), Texas (64,883), Nevada (64,429), Ohio (59,927), and New Jersey (36,542).

July 13, 2010
Nearly one-third of all residential properties sold in the first quarter of 2010 were foreclosure properties, according to Foreclosure Deals, an online lister of foreclosed homes for sale. Experts at the company believe that shows that people are continuing to turn to the foreclosure market as a plentiful source of low cost homes.

With 232,950 foreclosure homes sold during the first quarter, the total is down slightly from the final quarter of 2009, and down 33 percent from the total foreclosure homes sold in the first quarter of 2009.

The drop in total sales could be an indication of a shrinking market, but falling prices over the same period show that foreclosure homes can still be purchased at prices far below the national average. The price of a foreclosure during the first quarter was 27 percent below the average sale price of a traditional home sale.

"Buyers are attracted to foreclosures because they offer tremendous discounts," said James Foxx, a business analyst with Foreclosure Deals. "The numbers show that each year, the total number of foreclosures sold has increased, and that's not just a reflection of supply. They're very popular, and for good reason, there's no better investment value in real estate currently out there."

Rising foreclosure sales

According to statistics, foreclosure home sales did increase by 25 percent from 2008 to 2009, and over 320 percent since 2007. During the first quarter, foreclosures accounted for more than 50 percent of home sales in California, Nevada and Arizona. Foreclosure homes accounted for at least 33 percent of home sales in Michigan, Massachusetts, Florida, Georgia, and Illinois.

Bank-owned and real estate owned (REO) properties accounted for 19 percent of all residential sales during the first quarter, with an average market value discount of 34 percent. Pre-foreclosure homes -- homes in default -- accounted for 12 percent.

Ohio had the highest average discount on a foreclosed home in the first quarter, at 39.5 percent below market value. Close behind were Kentucky and Illinois at 39 percent, and California and Tennessee at 37 percent.

"The statistics show that buyers and investors are getting some great deals," said Foxx. "And you don't have to buy in the really tough markets, like Las Vegas, NV or Phoenix, AZ to find them."

The average discount on a foreclosure home nationwide has risen from 21 percent to 27 percent since 2006.

June 11, 2010
Mixed news on the housing market.

Foreclosure filings -- default notices, scheduled auctions and bank repossessions -- were reported on 322,920 properties in May.

According to RealtyTrac, an online marketplace for foreclosure properties, that's a three percent decrease from the previous month and an increase of less than one percent from May 2009. One in every 400 U.S. housing units received a foreclosure filing during the month.

"The numbers in May continued and confirmed the trends we noticed in April: overall foreclosure activity leveling off while lenders work through the backlog of distressed properties that have built up over the past 20 months," said James J. Saccacio, chief executive officer of RealtyTrac. "Defaults and scheduled auctions combined increased by 28 percent from 2007 to 2008 and another 32 percent from 2008 to 2009 -- creating a build-up of delayed bank repossessions. Lenders appear to be ramping up the pace of completing those forestalled foreclosures even while the inflow of delinquencies into the foreclosure process has slowed."

Foreclosure activity by type

A total of 96,462 U.S. properties received default notices (NOD, LIS) in May, a drop of seven percent from the previous month and a 22 percent decrease from May 2009. It was the fewest default notices since November 2008 and down 32 percent from the peak of 142,064 in April 2009.

Foreclosure auctions (NTS, NFS) were scheduled for the first time on a total of 132,681 U.S. properties, a decrease of four percent from the previous month and down less than one percent from May 2009. The May 2010 total was down 16 percent from the peak of 158,105 scheduled auctions in March 2010.

Bank repossessions (REOs) hit a record monthly high for the second month in a row in May, with a total of 93,777 U.S. properties repossessed by lenders during the month -- an increase of one percent from the previous month and an increase of 44 percent from May 2009. All 50 states posted year-over-year increases in REO activity.

Nevada, Arizona, Florida lead all

With one in every 79 housing units receiving a foreclosure filing in May, Nevada again had the nation's highest foreclosure rate despite a nearly 12 percent decrease in foreclosure activity from the previous month and a 16 percent decline from May 2009. The state's foreclosure rate was more than five times the national average.

Arizona foreclosure activity increased less than one percent from the previous month and was down nearly five percent from May 2009, but the state posted the nation's second highest foreclosure rate for the second month in a row. One in every 169 Arizona properties received a foreclosure notice during the month -- more than twice the national average.

One in every 174 Florida properties received a foreclosure notice in May, the nation's third highest foreclosure rate, and one in every 186 California properties received a foreclosure notice in May, the fourth highest state foreclosure rate.

Foreclosure activity in Michigan increased nearly six percent from the previous month and was up 46 percent from May 2009, helping the state post the nation's fifth highest foreclosure rate. One in every 223 Michigan properties received a foreclosure filing in May.

Other states with foreclosure rates ranking among the top 10 in May were Georgia, Idaho, Illinois, Utah and Maryland.

10 states account for more than 70 percent of national total

California alone accounted for more than 22 percent of the national total in May, with 72,030 properties receiving a foreclosure notice during the month -- up three percent from the previous month but down nearly 22 percent from May 2009.

With 50,685 properties receiving a foreclosure filing during the month, Florida accounted for nearly 16 percent of the national total in May despite a nearly 14 percent decrease in foreclosure activity from May 2009. Florida foreclosure activity increased nearly five percent from the previous month.

Michigan accounted for six percent of the national total, with 20,322 properties receiving a foreclosure notice during the month, and Arizona accounted for nearly five percent of the national total, with 16,097 properties receiving a foreclosure notice.

Illinois foreclosure activity decreased 20 percent from the previous month, but the state still accounted for nearly five percent of the national total, with 15,061 properties receiving foreclosure notices in May. Illinois foreclosure activity was up nearly 38 percent from May 2009.

Other states with foreclosure activity totals among the nation's 10 highest were Nevada (14,346), Georgia (13,778), Texas (11,137), Ohio (10,379) and New Jersey (7,993).

Metro foreclosure hot spots

With a one percent increase in foreclosure activity from May 2009, Vallejo-Fairfield, Calif., was the only metro area with a top-10 foreclosure rate to post an annual increase in foreclosure activity. One in every 101 Vallejo-Fairfield properties received a foreclosure notice in May, the fourth highest foreclosure rate among metropolitan areas with a population of 200,000 or more.

All other metro foreclosure rates in the top 10 were in cities with declining foreclosure activity on a year-over-year basis:

• No. 1 Las Vegas was down nearly 18 percent;

• No. 2 Merced, Calif. Was down seven percent;

• No. 3 Modesto, Calif., was down nearly 28 percent;

• No. 5 Cape Coral-Fort Myers, Fla., was down nearly 19 percent;

• No. 6 Stockton, Calif., was down 33 percent;

• No. 7 Riverside-San Bernardino-Ontario, Calif., was down nearly 29 percent;

• No. 8 Bakersfield, Calif., was down 19 percent;

• No. 9 Reno-Sparks, Nev., was down nearly 18 percent; and

• No. 10 Phoenix was down nearly nine percent.

Amid encouraging signs of a housing and overall economic turnaround, danger signals continue to flash. Among them is a report from the nation's mortgage bankers showing homeowners continue to fall behind on their payments.

At the end of the third quarter, the Mortgage Bankers Association says 9.64 percent of all outstanding mortgage loans were delinquent, a record high. The records are based on MBA data dating back to 1972.

MBA defines delinquent mortgages as those where at least one payment is past due. However, it doesn't include loans that have begun the foreclosure process. Foreclosures are also near an all-time high.

The percentage of loans in the foreclosure process at the end of the third quarter was 4.47 percent, an increase of 17 basis points from the second quarter of 2009 and 150 basis points from one year ago. The combined percentage of loans in foreclosure or at least one payment past due was 14.41 percent on a non-seasonally adjusted basis, the highest ever recorded in the MBA delinquency survey.

Increases Driven by Prime and FHA Loans

"Despite the recession ending in mid-summer, the decline in mortgage performance continues," said Jay Brinkmann, MBA's Chief Economist. "Job losses continue to increase and drive up delinquencies and foreclosures because mortgages are paid with paychecks, not percentage point increases in GDP. Over the last year, we have seen the ranks of the unemployed increase by about 5.5 million people, increasing the number of seriously delinquent loans by almost 2 million loans and increasing the rate of new foreclosures from 1.07 percent to 1.42 percent."

While subprime loans started the mortgage meltdown, it's prime fixed-rate loans that continue to drive it. MBA says prime loans - made to borrowers with good credit - continue to represent the largest share of foreclosures started and the biggest driver of the increase in foreclosures.

The group noted that 33 percent of foreclosures started in the third quarter were on prime fixed-rate and loans and those loans were 44 percent of the quarterly increase in foreclosures. The foreclosure numbers for prime fixed-rate loans will get worse, MBA predicts, because those loans represented 54 percent of the quarterly increase in loans 90 days or more past due but not yet in foreclosure.

"The performance of prime adjustable rate loans, which include pay-option ARMs in the MBA survey, continue to deteriorate with the foreclosure rate on those loans for the first time exceeding the rate for subprime fixed-rate loans," Brinkmann said. "In contrast, both subprime fixed-rate and subprime adjustable rate loans saw decreases in foreclosures."

FHA Loans Surge

Perhaps more disturbing is the fact that the foreclosure rate on FHA loans also increased, despite having a large increase in the number of FHA-insured loans outstanding. The number of FHA loans outstanding has increased by about 1.1 million over the last year, often taking the place of subprime mortgages that are no longer available.

FHA loans are designed to help first time buyers get into the housing market. Unlike conventional loans, they require small down payments - often less than five percent.

Once again the states of Florida, California, Arizona and Nevada have a disproportionate share of the mortgage problems. According to the report, they had 43 percent of all foreclosures started in the third quarter, down only slightly from 44 percent both last quarter and the third quarter last year. They had 37 percent of the nation's prime fixed-rate loan foreclosure starts and 67 percent of the prime ARM foreclosure starts. As of the end of September, 25 percent of the mortgages in Florida were at least one payment past due or in foreclosure.

"The outlook is that delinquency rates and foreclosure rates will continue to worsen before they improve," Brinkmann said.

The rate of foreclosure activity dipped slightly in August from the previous month, but still remains sharply higher than 2008's rate.

The latest monthly report from RealtyTrac, a foreclosure tracking firm, shows foreclosure filings - default notices, scheduled auctions and bank repossessions - were reported on 358,471 U.S. properties during the month, a decrease of less than 1 percent from the previous month but still an increase of nearly 18 percent from August 2008. The report also shows one in every 357 U.S. housing units received a foreclosure filing in August.

"The August report demonstrates that there is still an ample supply of properties filling the foreclosure pipeline even while the outflow of bank-owned REO properties onto the resale market is being more carefully regulated," said James J. Saccacio, chief executive officer of RealtyTrac. "After hitting a high for the year in July, REOs dropped 13 percent in August, but we also saw a record high number of properties either entering default or being scheduled for a public foreclosure auction for the first time."

Complaints received by ConsumerAffairs.com in recent months show a high level of frustration by homeowners who are trying to modify their loans to prevent becoming a foreclosure statistic.

"I called Litton for help to modify my loan back in December 2008. I spent all my time calling them trying to get someone who can help me, but each time I kept getting different answers," Rosa, of Freeport, NY, told ConsumerAffairs.com. I gave them all the information to apply for a modification and it was not approved. I got a letter in the mail stating that it was declined by the investor."

Nevada, Florida, California post top state foreclosure rates

With one in every 62 housing units receiving a foreclosure filing in August, Nevada continued to document the nation's highest state foreclosure rate despite an 8 percent decrease in foreclosure activity from the previous month. A total of 17,902 Nevada properties received a foreclosure filing during the month, still an increase of 53 percent from August 2008.

Florida documented the nation's second highest state foreclosure rate, with one in every 140 housing units receiving a foreclosure filing, and California documented the nation's third highest state foreclosure rate, with one in every 144 housing units receiving a foreclosure filing.

A 10 percent month-to-month decrease in foreclosure activity helped lower Arizona's foreclosure rate from the nation's third highest in July to fourth highest in August. One in every 150 Arizona housing units received a foreclosure filing in August - still more than twice the national average.

Other states with foreclosure rates ranking among the nation's 10 highest were Michigan, Idaho, Utah, Colorado, Georgia and Illinois.

Six states account for more than 60 percent of national total

Six states accounted for 62 percent of the nation's total foreclosure activity in August despite decreasing REOs in all six states. California REOs dropped 32 percent from the previous month, but the state continued to post the highest overall total of any state, with 92,326 properties receiving a foreclosure filing in August. California's total was down 15 percent from the previous month and was also down nine percent from August 2009 - the first year-over-year decrease in California foreclosure activity in RealtyTrac's monthly reports.

A total of 62,401 Florida properties received foreclosure filings in August, the nation's second highest state total and an increase of more than 10 percent from the previous month despite a 5 percent decrease in REO filings. Initial default notices in Florida increased 12 percent from the previous month, and scheduled auctions increased 13 percent from the previous month.

A new law in Michigan requiring lenders to file a separate public notice of default before scheduling a foreclosure auction boosted overall foreclosure activity numbers in the state for August. A total of 9,789 of the new default notices were reported in August, bringing the total number of Michigan properties receiving foreclosure filings to 19,359 for the month - a 134 percent spike from the previous month and third highest among the states. Michigan's foreclosure rate leapfrogged from 19th highest in July to fifth highest in August.

With 17,902 properties receiving foreclosure filings in August, Nevada posted the nation's fourth highest total despite a 24 percent decrease in REO filings from the previous month, and with 17,807 properties receiving foreclosure filings in August, Arizona posted the nation's fifth highest total despite an 11 percent decrease in REO filings from the previous month.

Illinois REO filings decreased 15 percent from the previous month, but the state's total of 13,078 properties receiving foreclosure filings was still sixth highest among all the states in August.

Other states with totals among the 10 highest in the country were Georgia (11,947), Ohio (11,368), Texas (11,261) and New Jersey (8,316).

You could call it "the year of the foreclosure." 2008 shaped up as a bad one for the nation's housing market, with a total of 3,157,806 foreclosure filings — default notices, auction sale notices and bank repossessions — reported on 2,330,483 U.S. properties during the year.

That's an 81 percent increase in total properties from 2007 and a 225 percent increase in total properties from 2006. The report also shows that 1.84 percent of all U.S. housing units — one in 54 — received at least one foreclosure filing during the year, up from 1.03 percent in 2007.

The data was supplied in a monthly compilation by RealtyTrac, a real estate firm specializing in marketing foreclosed property.

Foreclosure filings were reported on 303,410 U.S. properties in December, up 17 percent from the previous month and up nearly 41 percent from December 2007. Despite the spike in December, foreclosure activity for the fourth quarter was down nearly 4 percent from the previous quarter but still up nearly 40 percent from the fourth quarter of 2007.

"State legislation that slowed down the onset of new foreclosure activity clearly had an effect on fourth quarter numbers overall, but that effect appears to have worn off by December," said James J. Saccacio, chief executive officer of RealtyTrac. "The big jump in December foreclosure activity was somewhat surprising given the moratoria enacted by both Freddie Mac and Fannie Mae, along with programs from some of the major lenders and loan servicers aimed at delaying foreclosure actions against distressed homeowners.

"Clearly the foreclosure prevention programs implemented to date have not had any real success in slowing down this foreclosure tsunami. And the recent California law, much like its predecessors in Massachusetts and Maryland, appears to have done little more than delay the inevitable foreclosure proceedings for thousands of homeowners."

The California law, which requires lenders to provide written notice of their intent to initiate foreclosure proceedings 30 days prior to issuing a notice of default (NOD), resulted in a reduction of NODs from 44,278 in August to 21,665 in September. Notice of Default filings then surged by 122 percent, to over 42,000, in December. Similar patterns have occurred in other states, such as Massachusetts and Maryland, where similar types of foreclosure prevention legislation has been enacted.

Nevada, Florida, Arizona post top state foreclosure rates

More than 7 percent of Nevada housing units (one in 14) received at least one foreclosure notice in 2008, giving it the nation's highest state foreclosure rate for the year. A total of 77,693 Nevada properties received a foreclosure filing during the year, an increase of nearly 126 percent from 2007 and an increase of nearly 530 percent from 2006.

Florida registered the nation's second highest state foreclosure rate in 2008, with 4.52 percent of its housing units (one in 22) receiving at least one foreclosure filing during the year, and Arizona registered the nation's third highest state foreclosure rate, with 4.49 percent of its housing units (one in 22) receiving at least one foreclosure filing during the year.

Other states with Top 10 foreclosure rates for 2008 were California, Colorado, Michigan, Ohio, Georgia, Illinois and New Jersey.

California, Florida, Arizona post highest 2008 foreclosure totals

A total of 523,624 California properties received a foreclosure filing in 2008, the nation's highest state total. Foreclosure activity in the state increased nearly 110 percent from 2007 and nearly 498 percent from 2006.

With 385,309 properties receiving a foreclosure filing in 2008, Florida documented the second highest state total. Florida foreclosure activity increased 133 percent from 2007 and nearly 412 percent from 2006.

Arizona's 2008 total of 116,911 properties receiving a foreclosure filing was third highest among the states. Foreclosure activity in Arizona increased 203 percent from 2007 and 655 percent from 2006.

Other states with Top 10 totals for 2008 were Ohio, Michigan, Illinois, Texas, Georgia, Nevada and New Jersey.

Sunbelt cities plus Detroit land on top 10 metro foreclosure rates list

With 9.46 percent of its housing units (one in 11) receiving a foreclosure filing during the year, Stockton, Calif., registered the highest foreclosure rate among the nation's 100 largest metropolitan areas in 2008. Other California cities in the top 10 were Riverside-San Bernardino at No. 3 (8.02 percent, or one in 12 housing units); Bakersfield and No. 4 (6.17 percent, or one in 16 housing units); and Sacramento at No. 9 (5.20 percent, or one in 19 housing units).

Las Vegas documented the second highest metro foreclosure rate in 2008, with 8.89 percent of its housing units (one in 11) receiving a foreclosure filing during the year.

More than 6 percent of Phoenix housing units (one in 17) received a foreclosure filing during the year, giving the city the fifth highest metro foreclosure rate in 2008.

The foreclosure rate in Fort Lauderdale, Fla., ranked No. 6, with 5.95 percent of the metro area's housing units (one in 17) receiving a foreclosure filing in 2008. Other Florida cities in the top 10 were Orlando at No. 7 (5.48 percent, or one in 18 housing units) and Miami at No. 8 (5.21 percent, or one in 19 housing units).

With 4.52 percent of its housing units (one in 22) receiving a foreclosure filing during the year, Detroit registered the tenth highest metro foreclosure rate in 2008.

Month after month, the foreclosures mount. One in every 483 U.S. households received a foreclosure filing last month, the highest monthly rate since the real estate tracking firm RealtyTrac began issuing reports.

"If you look at a map, the highest rates of foreclosure are in areas where subprime lending has been the heaviest," said David Petrovich, Executive Director of the Society for the Preservation Of Continued Homeownership , a New Jersey-based non-profit group that tries to help consumers avoid foreclosure.

Petrovich formed SPOCH 10 years ago after a long career in real estate finance, where he worked in everything from appraisals to the servicing of loans.

"During that time I personally saw the devastating effect foreclosure has on a family," he said.

Petrovich says his group works with distressed homeowners to help them avoid foreclosure and stay in their homes. Since his group receives no support from banks or lenders, he says he's free to present all the options available to the homeowner.

"We bring truth to the table," he told ConsumerAffairs.com.

All the options

Homeowners, he says, don't always hear about all their options when they turn to lender-supported workout groups like HOPE NOW, which was established last year to assist homeowners in danger of foreclosure. He says HOPE NOW is not really about helping homeowners so much as it is about protecting lenders' interests.

HOPE NOW has been criticized by a number of consumer groups who say lenders should be doing more to help homeowners. Earlier this month HOPE NOW issued new guidelines that it said would make its services more helpful.

Petrovich says distressed homeowners should talk with HOPE NOW, but should understand that any help they receive will come at a cost: they'll have to waive their right to sue their lender.

"Not all loans that are in default are predatory or illegal, but many are, and in those cases homeowners need to preserve all their options, and that includes the right to take their lender to court," Petrovich said.

Petrovich has written a book, Fight Foreclosure!, which offers homeowners practical advice for keeping their homes out of foreclosure, while avoiding the many foreclosure rescue scams that prey on homeowners in trouble.

A cornerstone of that advice is to communicate directly with the lender to see what can be worked out. Another key piece of advice is to act quickly.

"Foreclosure is a time-sensitive problem. There is very little time between the first missed payment and a foreclosure filing," he said.

Perfect storm

Petrovich said he foresaw the "perfect storm" of the foreclosure crisis years ago, because of "ridiculous" loans and escalating prices that made real estate attractive to speculators. With foreclosures saturating the market with unsold houses, homeowners who need to sell can't find a buyer who will pay what they owe for the property. All too often, the unsellable house becomes another foreclosure statistic.

In years past a real estate agent might work out a "short sale," with the buyer paying less than what is owed the lender. The lender would get less than the full amount of the loan and the homeowner would avoid foreclosure, and the deal might be done in as little as 90 days, avoiding having a home sit empty for months, dragging down surrounding property values.

Petrovich says it's much harder to persuade lenders to agree to a short sale now, for a number of reasons. Many mortgages have been "securitized," meaning more parties have to agree to accept a loss. Because of lenders' huge financial losses, many people who service loans have been laid off. And the huge increase in the number of requested short sales, because of the foreclosure crisis, has led to big backlogs.

"Perhaps the most obvious obstacle is the lenders' reliance on historic comparable sale values which do not reflect current values," Petrovich said. "Lenders are fierce in their quest to maximize net recovery and seem to be willing to proceed to foreclosure auction in hopes of higher recovery, which ain't happening."

So the foreclosures continue, month after month.

Where does it end? Petrovich thinks we have a long way to go yet, with as many as three million more people losing their homes. However, he says lenders have become more proactive, seeking to help homeowners before their loans go bad. That, he says, will pay off in the future.

In the meantime, he says homeowners should educate themselves about foreclosure and their rights. Having an attorney look over your mortgage papers could be money well spent. Often legal aid services will do it at no charge, if you qualify.

And don't wait. Petrovich says time is of the essence for homeowners who want to fight foreclosure.

Ed McMahon is not alone. One in every 483 U.S. households received a foreclosure filing last month, the highest monthly rate since the real estate tracking firm RealtyTrac began issuing reports.

The company said foreclosure filings default notices, auction sale notices and bank repossessions were reported on 261,255 properties during the month, a seven percent increase from the previous month and a 48 percent increase from May 2007.

"May was the third straight month where we've seen a month-to-month increase in foreclosure activity and the 29th straight month we've seen a year-over-year increase," said James J. Saccacio, RealtyTrac's CEO.

But there may be a hint of good news in the grim numbers.

Saccacio says the rate of filings may be at its highest level, but at least the rate of increase is slowing down. Default notices were up just one percent from the previous month and auction notices were actually down three percent from the previous month.

However, bank repossessions continued to surge in May posting a double-digit percentage increase from the previous month and more than twice the number reported in May 2007 which pushed the total inventory of bank-owned REOs in our database to more than 700,000.

Nevada has highest rate

With one in every 118 households receiving a foreclosure filing in May, Nevada posted the highest state foreclosure rate for the 17th consecutive month. Foreclosure filings were reported on a total of 9,009 Nevada properties, an increase of nearly 24 percent from the previous month and a 72 percent increase from May 2007.

California foreclosure activity in May increased 11 percent from the previous month and 81 percent from May 2007, helping the state continue to register the nation's second highest state foreclosure rate. One in every 183 California households received a foreclosure filing during the month, a rate that was 2.6 times the national average.

Arizona's May foreclosure rate one in every 201 households received a foreclosure filing during the month ranked third highest among the states for the second month in a row. Arizona foreclosure activity increased nearly 12 percent from the previous month and almost 119 percent from May 2007.

One in every 228 Florida households received a foreclosure filing in May, giving it the fourth highest foreclosure rate among the states. Michigan foreclosure activity in May increased nearly 25 percent from the previous month, helping the state's foreclosure rate to jump to fifth highest among the states after ranking No. 9 the previous month. One in every 353 Michigan households received a foreclosure filing in May.

Other states with foreclosure rates ranking among the top 10 were Georgia, Colorado, Massachusetts, Ohio and New Jersey.

California has highest total

Foreclosure filings were reported on 71,930 California properties, 37,364 Florida properties and 12,959 Arizona properties, the three highest state totals in May. Michigan was not far behind Arizona, with 12,792 properties receiving foreclosure filings during the month.

Foreclosure filings were reported on 12,295 Ohio properties in May, the fifth highest state total despite a nearly 7 percent decrease from May 2007. With one in every 410 households receiving a foreclosure filing, Ohio's foreclosure rate ranked No. 9 among the states and was above the national average.

Georgia foreclosure activity increased 11 percent from the previous month and 23 percent from May 2007, giving the state 10,241 properties with foreclosure filing in May the nation's sixth highest total. And with one in every 378 Georgia households receiving a foreclosure filing during the month, the state's foreclosure rate also ranked No. 6 among the states.

Other states in the top 10 for total properties with filings were Texas, Illinois, Nevada and New Jersey.

Top metros

For the second month in a row, California and Florida cities accounted for nine out of the top 10 metropolitan foreclosure rates among the 230 metropolitan areas tracked in the report.

Seven California cities were in the top 10, led by Stockton in the top spot. One in every 75 Stockton area households received a foreclosure filing in May more than six times the national average. Other California cities in the top 10 were Merced at No. 3, Modesto at No. 4, Riverside-San Bernardino at No. 5, Vallejo-Fairfield at No. 7, Bakersfield at No. 8, and Sacramento at No. 9.

The Cape Coral-Fort Myers metro area in Florida registered the second highest metro foreclosure rate in May, with one in every 79 households receiving a foreclosure filing during the month. The other Florida metro area in the top 10 was Port Lucie-Fort Pierce at No. 10.

Las Vegas was the only city outside of California and Florida with a foreclosure rate ranking among the top 10. One in every 96 Las Vegas households received a foreclosure filing in May, more than five times the national average and No. 6 among the metro areas.

Metro areas with foreclosure rates among the top 20 included Phoenix at No. 12, Detroit at No. 14, San Diego at No. 17 and Miami at No. 19.

The foreclosure tsunami gained strength at the start of 2008, with foreclosures surging 112 percent over the same period a year ago. The real estate marketing firm RealtyTrac says first-quarter foreclosures were up 23 percent over the last quarter of 2007.

The foreclosure report comes on the same day as the latest S&P Case/Shiller Home Price Index showed home prices falling 12.7 percent in the last 12 months, ending in February. The Index tracks home prices in the 20 largest U.S. housing markets.

Of the 20 markets surveyed, 17 had record declines. Half of the markets reported double-digit price declines.

"There is no sign of a bottom in the numbers," said S&P spokesman David M. Blitzer.

The firm's quarterly report shows foreclosure filings default notices, auction sale notices and bank repossessions were reported on 649,917 properties during the first quarter, with one in every 194 U.S. households receiving a foreclosure filing during the period.

"Foreclosure activity in the first quarter increased on a year-over-year basis in 46 out of the 50 states and in 90 of the nation's 100 largest metro areas, demonstrating that most regions of the country are seeing more foreclosures," said James J. Saccacio, chief executive officer of RealtyTrac. "In some areas there are also some unusual, non-market factors impacting the foreclosure numbers."

As an example, Saccacio points to the city of Philadelphia, which in late March issued a temporary moratorium on all foreclosure auctions for April.

The city has since adopted a program that will delay foreclosure proceedings on owner-occupied properties until the owners have met face-to-face with lenders to attempt a loan workout plan that would prevent foreclosure.

"While we're hopeful that programs like those in Philadelphia will have a positive long-term impact, they could be simply deferring another flood of foreclosures," Saccacio said. "And that could extend the length of time it takes the market to recover from this downward cycle, in which we've already seen seven consecutive quarters of increasing foreclosure activity."

West is worst

Nevada, California and Arizona posted the top state foreclosure rates in the latest report.

One in every 54 Nevada households received a foreclosure filing during the first quarter, the highest foreclosure rate among the states and 3.6 times the national average. Foreclosure filings were reported on 19,595 Nevada properties during the quarter, up 3 percent from the previous quarter and up 137 percent from the first quarter of 2007.

Foreclosure filings were reported on 169,831 California properties during the first quarter, the highest total among the states and a rate of one in every 78 households the nation's second highest foreclosure rate. Foreclosure activity in California increased 32 percent from the previous quarter and was up nearly 213 percent from the first quarter of 2007.

Arizona documented the nation's third highest state foreclosure rate, with one in every 95 households receiving a foreclosure filing during the quarter. Foreclosure filings were reported on 27,404 Arizona properties during the quarter, up 45 percent from the previous quarter and up nearly 245 percent from the first quarter of 2007.

Foreclosure filings were reported on 87,893 Florida properties during the first quarter, the second highest state total and giving Florida the nation's fourth highest foreclosure rate one in every 97 households received a foreclosure filing during the quarter. Foreclosure activity in the state was up 17 percent from the previous quarter and up 178 percent from the first quarter of 2007.

Colorado foreclosure activity increased 33 percent from the previous quarter and 78 percent from the first quarter of 2007, and the state's foreclosure rate ranked No. 5 among the states. Foreclosure filings were reported on 18,996 Colorado properties during the quarter, a rate of one in every 110 households.

Other states with foreclosure rates among the top 10 were Georgia, Michigan, Ohio, Massachusetts and Connecticut.

Top metro areas

The Q1 2008 U.S. Foreclosure Market Report also ranks the nation's 100 largest metropolitan areas by foreclosure rate. California and Florida metro areas accounted for 13 of the top 20 metro foreclosure rates, with the California cities of Stockton and Riverside-San Bernardino taking the No. 1 and No. 2 spots.

One in every 30 Stockton households received a foreclosure filing during the quarter 6.6 times the national average and one in every 38 Riverside-San Bernardino households received a foreclosure filing during the quarter more than five times the national average.

Other California metro areas in the top 20 included Bakersfield at No. 4, Sacramento at No. 5, San Diego at No. 9, Oakland at No. 10, Fresno at No. 12, Los Angeles at No. 17 and Orange County at No. 19.

Las Vegas documented the third highest metro foreclosure rate, with one in every 44 households receiving a foreclosure filing during the quarter. The metro area's foreclosure activity increased 1 percent from the previous quarter and 134 percent from the first quarter of 2007.

Detroit foreclosure activity in the first quarter decreased 22 percent from the previous quarter and was down almost 4 percent from the first quarter of 2007, but the metro area's foreclosure rate still ranked No. 6, with one in every 68 households receiving a foreclosure filing during the quarter. Phoenix foreclosure activity increased 46 percent from the previous quarter and 294 percent from the first quarter of 2007, and the metro area's foreclosure rate ranked No. 7, with one in every 70 households receiving a foreclosure filing during the quarter.

The highest ranked Florida metro area was Fort Lauderdale, which ranked No. 8 with one in every 73 households receiving a foreclosure filing during the quarter. Other Florida metro areas in the top 20 included Orlando at No. 13, Miami at No. 14 and Sarasota-Bradenton-Venice at No. 15. The foreclosure rate in Tampa-St. Petersburg-Clearwater ranked No. 21.

Other metro areas with foreclosure rates among the top 20 included Denver at No. 11, Atlanta at No. 16, Cleveland at No. 18 and Memphis, Tenn., at No. 20.

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One in every 538 U.S. households received a foreclosure filing during March, a five percent rise over the previous month and a whopping 57 percent increase over March 2007.

The real estate marketing firm RealtyTrac reports 234,685 properties nationwide were subject to foreclosure filings default notices, auction sale notices and bank repossessions.

"The March numbers show that overall foreclosure activity so far this year continues to run nearly 60 percent above the levels we saw last year," said James J. Saccacio, chief executive officer of RealtyTrac.

Saccacio notes that while repossessions were up nearly 129 percent in March, auction notices were up only 32 percent. He says that means more defaulting homeowners are simply walking away and deeding their properties back to the foreclosing lender.

This deed-in-lieu-of-foreclosure process allows the lender to take possession of a property without putting it up for public foreclosure auction.

Sunbelt Leads

Nevada, California and Florida have the highest foreclosure rates.

The report shows that one in every 139 Nevada households received a foreclosure filing during March, 3.9 times the national average and the highest state foreclosure rate for the 15th consecutive month. Foreclosure filings were reported on a total of 7,659 properties during the month, up 24 percent from the previous month and up nearly 62 percent from March 2007.

Foreclosure rates in California and Florida ranked second and third highest respectively among the states for the fourth straight month. One in every 204 California households received a foreclosure filing in March 2.6 times the national average and one in every 282 Florida households received a foreclosure filing during the month 1.9 times the national average.

Despite a nearly five percent monthly dip in foreclosure activity, Arizona posted the nation's fourth highest state foreclosure rate for the third straight month, with one in every 283 households receiving a foreclosure filing in March. Foreclosure filings were reported on 9,199 properties during the month, up nearly 106 percent from March 2007.

Colorado foreclosure activity decreased 8 percent from the previous month and 1 percent from March 2007, but the state's foreclosure rate continued to rank fifth highest among the states. Foreclosure filings were reported on 6,180 Colorado properties during the month one in every 339 total households.

Other states with foreclosure rates ranking among the top 10 were Georgia, Ohio, Michigan, Massachusetts and Maryland.

Highest totals

California, Florida, Ohio reported the highest foreclosure totals.

Foreclosure filings were reported on 64,711 California properties in March, the most of any state for the 15th consecutive month. California foreclosure activity increased nearly 21 percent from the previous month and almost 106 percent from March 2007.

Florida posted the nation's second highest total, with foreclosure filings reported on 30,254 properties in March. The state's foreclosure activity decreased nearly 7 percent from the previous month but was still up almost 112 percent from March 2007.

Ohio and Georgia both registered month-to-month and year-over-year increases in foreclosure activity, and foreclosure filings were reported on more than 11,000 properties in both states. Ohio's total of 11,273 was the nation's third highest, and one in every 448 Ohio households received a foreclosure filing during the month ranking its foreclosure rate No. 7 among the states.

Georgia's total of 11,047 was the nation's fourth highest, and one in every 351 Georgia households received a foreclosure filing during the month ranking its foreclosure rate No. 6 among the states.

Foreclosure filings were reported on a total of 10,700 Texas properties in March, a nearly 13 percent decrease from the previous month and a 16 percent decrease from March 2007, and the state's total dropped to fifth highest among the states.

Other states in the top 10 for total properties with filings were Michigan, Arizona, Illinois, Nevada and Colorado.

The number of U.S. homes going into foreclosure totaled nearly 202,000 in November, a 68 percent rise year over year, but down slightly from the previous month.

In its monthly report, the real estate tracking firm RealtyTrac, Inc., said foreclosure activity likely peaked for the year in August.

This could indicate that foreclosure activity has topped out for the year, but the true test of whether this ceiling will hold will come at the beginning of next year -- when we anticipate that a seasonal surge in foreclosure filings and another possible wave of resetting mortgages could place further pressure on the housing market, said RealtyTrac CEO James J. Saccacio.

The report shows a total of 201,950 foreclosure filings, which can include everything from default notices to actual bank repossessions. That number is 10 percent lower than Octobers total, but amounts to a national foreclosure filing rate of one for every 617 households.

Foreclosure activity remains concentrated in a handful of states. Nevada led the nation for the 11th month in a row, with one filing for every 152 househilds. Florida was second with one out of 282 homes and Ohio was third with one out of every 307 homes.

California had the highest number of foreclosure notices, at 39,992. In terms of Metro areas, Stockton, California led the nation with the highest foreclosure rate, recording a staggering one out of every 99 households heading into foreclosure.

While Saccacio says foreclosure activity appears to have leveled off for 2007, he says it could start back up again in 2008.

The reason?

Homes sold with subprime mortgages during the still-red hot real estate market of 2006 will begin to reset to higher interest rates. When that happens, monthly payments often go up by as much as several hundred dollars a month.

Foreclosure activity jumped in August, surging 115 percent over last August, 36 percent over July.

In its monthly report, RealtyTrac, an online marketplace for foreclosed properties, said August was the busiest month since it began issuing a monthly report in January 2005.

According to the numbers, the national foreclosure rate amounted to one foreclosure filing for every 510 households - the highest figure ever issued in the report.

The findings echo a report earlier this month from the Mortgage Bankers' Association (MBA), which found that incidents of foreclosure for the second quarter of 2007 were at their highest rates in the organization's 55-year history.

The MBA report found that homes entering foreclosure were at 0.65 percent of all outstanding loans, an increase from the previous high of 0.58 percent for the first quarter of 2007.

The jump in foreclosure filings this month might be the beginning of the next wave of increased foreclosure activity, as a large number of subprime adjustable rate loans are beginning to reset now, said James J. Saccacio, chief executive officer of RealtyTrac.

Another significant factor in the increased level of foreclosure activity is that the number of REO filings (bank repossessions) is increasing dramatically, which means that a greater percentage of homes entering foreclosure are going back to the banks.

Big 3

Nevada, California and Florida were the top three states for foreclosures.

Nevada continued to register the nations highest state foreclosure rate, one foreclosure filing for every 165 households more than three times the national average.

The state reported 6,197 foreclosure filings during the month, a 21 percent increase from the previous month and more than triple the number reported in August 2006.

Californias foreclosure rate jumped to second highest among the states thanks to a 48 percent month-over-month spike in foreclosure activity. The state reported 57,875 foreclosure filings during the month, a foreclosure rate of one foreclosure filing for every 224 households more than twice the national average.

Florida foreclosure activity jumped 77 percent from the previous month, boosting the states foreclosure rate from seventh highest to third highest among the states. The state reported 33,932 foreclosure filings, a foreclosure rate of one foreclosure filing for every 243 households.

Other states with foreclosure rates ranking among the nations 10 highest were Georgia, Ohio, Michigan, Arizona, Colorado, Texas and Indiana.

Sun Belt, Rust Belt

Seven of the top 10 states in terms of total foreclosure filings in August were located in the Sun Belt, and three of the top 10 states were in the Rust Belt.

After California and Florida, Ohio registered the third highest state total, with 17,793 foreclosure filings during the month. The state documented a foreclosure rate of one foreclosure filing for every 281 households, fifth highest in the nation.

Texas, Michigan and Georgia all reported more than 10,000 foreclosure filings for the month, documenting the fourth, fifth and sixth highest state foreclosure totals respectively, followed by Arizona, Colorado, Illinois and Nevada.

Top Metros

California cities once again accounted for six of the top 10 metro foreclosure rates in August, with the top three spots all taken by California cities.

Modesto documented the nations highest metro foreclosure rate, one foreclosure filing for every 79 households, followed by Stockton and Merced. Other California cities in the top 10 included Vallejo-Fairfield at No. 5, Riverside-San Bernardino at No. 6 and Sacramento at No. 7.

Detroit posted a foreclosure rate of one foreclosure filing for every 87 households, the nations fourth highest metro foreclosure rate and more than five times the national average. Fort Lauderdale, Fla., Las Vegas and Cleveland, Ohio, ranked Nos. 8, 9 and 10.

The foreclosure epidemic shows no signs of losing steam, as a new report from the Mortgage Bankers' Association (MBA) found that incidents of foreclosure for the second quarter of 2007 were at their highest rates in the organization's 55-year history.

The MBA report found that homes entering foreclosure were at 0.65 percent of all outstanding loans, an increase from the previous high of 0.58 percent for the first quarter of 2007.

The MBA's quarterly reports have been tracking a consistent increase in foreclosures across the country for the past several financial quarters.

Delinquent payments rose to 5.12 percent of all outstanding loans, an increase of 73 seasonally-adjusted points from the previous year. Delinquencies for subprime borrowers increased to 14.82 percent, roughly one of every seven outstanding subprime loans, according to the report.

MBA vice-president and senior economist Doug Duncan pointed to the continuing collapse of formerly hot housing markets in California, Nevada, Florida, and Arizona as responsible for extending the foreclosure epidemic.

"Were it not for the increases in foreclosure starts in those four states, we would have seen a nationwide drop in the rate of foreclosure filings," Duncan said.

"Thirty four states had decreases in their rates of new foreclosure and the increases were very modest in the states with increases, other than those four," Duncan said. "The four states of California, Florida, Nevada and Arizona have more than one-third of the nations subprime ARMs, more than one-third of the foreclosure starts on subprime ARMs, and are responsible for most of the nationwide increase in foreclosure actions."

RealtyTrac's regular foreclosure reports also show record-breaking foreclosures in those four states and other collapsing markets, with a 93 percent increase in overall nationwide foreclosures since July 2006.

The epidemic of foreclosures across the nation has triggered calls for help from consumer and civil rights groups such as ACORN, who called on lenders to impose a moratorium on foreclosures of homes bought with subprime loans.

The coalition wants greater protection for black and Latino families from predatory lenders, who often target minorities with expensive subprime loans, even when they could qualify for loans at "prime" rates.

A task force of several Federal agencies has asked lenders to work with borrowers in trouble, providing them leeway to defer payments or convert nontraditional loans to conventional fixed-rate loans.

The task force has also promised stronger oversight of subprime lenders and stricter rules under which they can offer mortgages.

What a difference a year makes. Foreclosure notices rose 47 percent from March 2006 to last month, according to RealtyTrac, a real estate research firm. The company said banks initiated 149,000 foreclosure actions in March 2007, the most since the company began collecting data.

The March numbers were up seven percent from the month before. It makes for a national foreclosure rate of one foreclosure filing for every 775 U.S. households during the month.

"Foreclosure activity shifted into a higher gear in the first two months of 2007, and March's numbers continued that trend," said James J. Saccacio, chief executive officer of RealtyTrac.

But Saccacio said that while foreclosures are causing a major disruption in the subprime sector of the lending industry and saturating pockets of some local markets, "it's important to note that U.S. foreclosure activity overall is not far above historical norms."

"Last year we saw a surge in foreclosures in the first quarter followed by a leveling off through the second and third quarters," he said. "However, if that pattern does not repeat itself, and foreclosure activity continues to accelerate, we may see more widespread consequences."

Nevada, Colorado Top the List

Nevada's foreclosure activity increased 29 percent from the previous month, helping the state register the nation's highest state foreclosure rate for the third month in a row. The state reported 4,738 foreclosure filings during the month, more than triple the number reported in March 2006 and a foreclosure rate of one foreclosure filing for every 183 households more than four times the national average.

Colorado's foreclosure rate of one new foreclosure for every 292 households was 2.7 times the national average and second highest among the states. The state reported 6,267 foreclosure filings during the month, an 18 percent increase from the previous month and a 16 percent increase from March 2006.

California's foreclosure rate also leaped upward. The state reported 31,434 foreclosure filings in March, the most of any state and an increase of 36 percent from the previous month. The state's total was nearly triple the number reported a year ago and accounted for 21 percent of the nation's total.

The surge in foreclosure activity pushed California's foreclosure rate to one foreclosure filing for every 389 households -- third highest among all the states and nearly twice the national average.

Other states with foreclosure rates ranking among the nation's 10 highest in March were Georgia, Arizona, Michigan, Florida, Ohio, Indiana and Illinois.

The five states with the most foreclosure filings in March -- California, Florida, Texas, Michigan and Ohio -- together accounted for 50 percent of the nation's total. Foreclosure activity increased on a year-over-year basis in all five of these states, and all five documented foreclosure rates above the national average, but foreclosure activity was down from the previous month in Florida and Michigan.

Six out of the 10 cities with the nation's highest metro foreclosure rates were located in California. A 137 percent spike in foreclosure activity boosted the foreclosure rate in Stockton, Calif., to one foreclosure filing for every 128 households -- the highest metro foreclosure rate in the nation and more than six times the national average.

Other California cities with foreclosure rates in the top 10 included Vallejo-Fairfield at No. 3, Modesto at No. 5, Sacramento at No. 6, Riverside-San Bernardino at No. 7 and Bakersfield at No. 10.

Las Vegas documented the nation's second highest metro foreclosure rate, one foreclosure filing for every 139 households more than five times the national average. The metro area reported 4,307 foreclosure filings during the month, a 33 percent increase from the previous month. Other metro areas with foreclosure rates among the nation's 10 highest included Greeley, Colo., Detroit and Denver.