Banks filed foreclosures on nearly 1.9 million homes and took back more than 800,000 last year, according to online industry tracker RealtyTrac. Both were steep declines from the previous year, but the “dramatic drop” in REO activity was a result of banks being in “full delay mode,” RealtyTrac CEO Brandon Moore said.
“The lack of clarity regarding many of the documentation and legal issues plaguing the foreclosure industry means that we are continuing to see a highly dysfunctional foreclosure process that is inefficiently dealing with delinquent mortgages,” Moore said in a company release.
And now banks are ramping up activity on delinquent mortgages. RealtyTrac spokesman Daren Blomquist told the Los Angeles Times that banks increased initial notice-of-default filings in California in the last half of 2011, a clear sign that the brakes are off.
Foreclosure starts for seriously delinquent loans have exceeded 10 percent since September 2011, the highest rate since late 2009, according to recent studies by Fitch Ratings.
“Rising foreclosure start rates are likely a sign that servicers are playing catch-up on actions that have been delayed over the past year,” Diane Pendley, managing director at Fitch, told DSNews.
Added RealtyTrac’s Moore: “We expect that trend to continue this year, boosting foreclosure activity for 2012 higher than it was in 2011, though still below the peak of 2010.”
RealtyTrac’s annual report, released last week and available to view at www.RealtyTrac.com, indicated banks filed notices of default, auction or bank repossession on 1,887,777 homes in 2011. And it seized 804,423 homes as bank-owed REO properties. That was down from the 2.4 million foreclosure filings and nearly 1 million REO seizures in 2010.
California continues to be among the hardest-hit areas for foreclosures. Of the 20 metro areas nationwide with the highest foreclosure rates, 10 were in California. Second behind Las Vegas was Stockton (5.43 percent 1 in 18 homes with at least one foreclosure filing). Riverside-San Bernardino was No. 5 on the list (5.16 percent, 1 in 19 homes).
Statewide, one in every 31 California homes had a foreclosure filing, ranking third-highest in the country, RealtyTrac reported.
Nationwide, foreclosure processing times continued to increase last year, plagued by legal issues and challenges to existing procedures. U.S. properties that were foreclosed on in the last quarter of 2011 took on average 348 days to complete, compared with 336 days in the third quarter and 305 days a year earlier.
Conversely, foreclosures in California picked up speed in the last quarter of 2011, with an average timeline of 352 days, down from 363 in the previous quarter.
With more than 3.5 million homes with seriously delinquent loans, it could be years to clear out the “shadow inventory” of properties that have continued to keep values down across the country.
The fallout: Prices could continue to decline through 2012 or even later, making it even more difficult for underwater homeowners to continue to tread water waiting for values to come back.
HAVE WE HIT BOTTOM?
Housing experts surveyed by Zillow expect U.S. home prices to decline until late this year or early next year. After 2013, the panelists expect values to increase about 3 percent per year through 2016, meaning homes could be worth about 10 percent more five years from now than they are today.
“There is a consensus among the nation’s top housing experts that we have not yet reached a bottom and are instead working through a prolonged bottoming process,” said Dr. Stan Humphries, Zillow’s chief economist.
Industry analysts at Capital Economists say national home prices have reached the bottom already but will remain flat the next two years before increasing 2.5 percent in 2014.
An increased housing supply from an estimated 3.5 million to 4 million properties in “shadow inventory” will keep prices lows in the next few years, they predicted. The last of the five-year adjustable loans will reset later this year, and then come the seven- and 10-year adjustables, though they make up a much smaller percentage of the total adjustables remaining.
With loan amounts double the value of their house, distressed homeowners – who may not see “break-even” for 10, 15 or even 20 years – face critical decisions today.
There are many programs available to help homeowners avoid a financially and emotionally devastating foreclosure. To find out if you qualify, call us today at 951-778-9700.