Foreclosure Rate Took a Dive at the End of the Year

Homeowners and investment property owners in Las Vegas can breathe a tentative sigh of relief, following the news that the pace of foreclosures in the US has dropped. The decline comes after revelations that thousands of foreclosure documents may have been improperly prepared.

RealtyTrac reported on Wednesday that in December, U.S. foreclosure filings were down 26% from December 2009. This drop was the biggest in at least five years. Lenders and mortgage servicers imposed delays on foreclosure processes in October, after reports in September that some servicers did not follow legal procedures in tens of thousands of foreclosures.

Although mortgage servicers say they’re resuming stalled foreclosures, RealtyTrac estimates that up to 250,000 cases may have been delayed by the controversy. According to RealtyTrac CEO James Saccacio, those foreclosures may be restarted and added to the numbers in early 2011.

The Department of Justice and the state attorneys general are investigating. “Lenders have been spanked. They’re spending money to make sure every ‘i’ is dotted and every ‘t’ is crossed,” says Christopher Thornberg, of Beacon Economics. He believes the pace of foreclosures “will pick back up.”

In addition to taking longer to make sure paperwork is correct, companies may be slowing foreclosures so that they don’t glut the market with homes for sale, which would depress prices, says Patrick Butler, head of asset disposition for Foreclosure.com. They may also be delaying foreclosures to avoid the cost of maintaining properties while others remain unsold, Butler says.

In December, bank repossessions nationwide totaled 69,847, down 24% from December 2009.

For the year, almost 2.9 million U.S. properties received foreclosure filings, a record high, and up 2% from 2009. Nationwide, one of every 45 homes received at least one foreclosure filing during the year.

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