As per the data released by RealtyTrac, the leading online marketplace of foreclosure properties, foreclosure filings in July dropped to the lowest level since November 2007. A total of 212,764 properties were issued notices of default, auction or repossession during the month of July, reflecting a decline of 4% from the prior month and 35% from the prior-year period.
According to the source, a total of 10 states – California, Florida, Georgia, Michigan, Illinois, Texas, Arizona, Nevada, Ohio and Wisconsin – accounted for more than 70% of the overall foreclosure activity in July.
Additionally, the first step in the foreclosure process, issuance of default notice, slipped 7% sequentially and 39% year over year to 59,516. Similarly, foreclosure auctions fell 5% from June and plunged 37% from July 2010 to 85,419 properties. Further, rate of bank repossessions, the final stage, declined 1% from the previous month and 27% from the year-ago month to 67,829 properties.
However, the present decreases in foreclosure activities have nothing to do with improvement in housing sector. The current spate of declines initially started in October last year when the “robo-signing” controversy forced many mortgage servicers, including JPMorgan Chase & Co. (JPM), Bank of America Corporation (BAC) and Ally Financial Inc., to temporarily suspend foreclosures across the country.
Following the detection of flawed documents (resulting from the use of “robo-signers”), the U.S. bank regulators as well as the state attorney generals (AGs), geared up to take actions against mortgage servicers such as JPMorgan, BofA, Ally Financial Inc., Wells Fargo & Company (WFC) and Citigroup Inc. (C).
However, it now appears that the present declining trend in foreclosure activity is a result of a combination of various measures – loan modifications, lender-borrower mediations and mortgage payment assistance for the unemployed – taken by national and state-level regulators to allow distressed home owners to prevent foreclosures.
The RealtyTrac report further stated that mortgage servicers would expectedly repossess about 800,000–900,000 homes this year, lower than the previous assumption of 1.2 million homes.
Nevertheless, once the housing market problems get resolved and the economy stabilizes, the foreclosure activities will definitely bounce back. So, it would be wise to get prepared for an exceptional rise in foreclosures over the next several months.