Nevada, Arizona and Michigan, three of hardest hit states in the U.S. housing downturn have their foreclosures drop to over 25%, an all time high since the start of housing crisis more than five years ago. This provides a very important sign of the nation's housing market improvement.
As per RealtyTrac figures, a 66% dip in foreclosures were felt by Nevada in the last year. This dip is said to be the result of a new state law that went into effect in October that forces banks to show evidence of homes' legal titles at hand prior to its formal foreclosure. The entire Nevada's home foreclosure sales in the month of May were recorded 1,334. For four consecutive years, the state has led the nation in foreclosures before the new law has been enacted.
The National Conference of State Legislature, a bipartisan group serving state lawmakers in all 50 states, stated that in 2011, there were over 400 foreclosure laws enacted across the U.S. Nevada, having the most restrictive, makes foreclosing a property without proper paperwork a crime.
A 40% drop in foreclosures was experienced in Arizona in the past year. This is the effect of a slowdown in foreclosure reviews and holding back of foreclosing on homeowners with defaulted mortgages of banks.
On another note, RealtyTrac stated that Michigan has plunged 28% in its foreclosures in the last year, despite the fact that the state is just starting to pull out of a six year real estate economic depression.
Nevertheless, a study conducted by the Federal Reserve found that in states requiring judicial review for foreclosures, delays had no long term benefits for homeowners. Most of the time, such delays only uphold problems related to the housing market.
CoreLogic CEO Anand Nallathambi said, “While foreclosure inventories in most states are declining, the foreclosure inventory is still rising in many judicial states, such as Hawaii, New York and Connecticut." The suprge is primarily a result of slowdowns induced by delays related to the robo-signing scandal. However, the nation’s five largest banks increased formal foreclosures as all five banks attained a $25 billion settlement with 49 state attorney generals.
Federal Housing Finance Agency attorney Alfred Pollard told a House oversight hearing, “Many state laws that stretch out the period for legitimate foreclosures result in no added benefit for the homeowner and produce harm to the housing finance system and to neighborhoods.”
Due to some homes wanted to be foreclosed by banks, the sustainable housing recovery in some areas of the country are being held back. 1.4 million homes or 3.4% of all mortgaged homes were in the national foreclosure inventory as of the end of May, in contrast to 1.5 million a year ago, CoreLogic approximates.
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