RealtyTrac on Thursday released its U.S. Foreclosure Market Report for September 2008 with some positive developments. While foreclosure filings reported on 265,968 properties in September - which included default notices, auction sale notices and bank repossessions - saw a 12 percent decrease from the previous month, there was still a 21 percent increase from September 2007. One in every 475 U.S. housing units received a foreclosure filing in September.
Slowing down foreclosures
So what's behind the 12 percent drop?
"Much of the 12 percent decrease in September can be attributed to changes in state laws that have at least temporarily slowed down the pace at which lenders are moving forward with foreclosures," said James J. Saccacio, chief executive officer of RealtyTrac.
Most significantly, SB 1137 in California took effect in early September and requires lenders to make contact with borrowers at least 30 days before filing a notice of default (NOD). In September, California saw NODs drop 51 percent from the previous month, and that drop had a significant impact on the national numbers given that California accounts for close to one-third of the nation's foreclosure activity each month.
Another example is North Carolina, where legislation was signed into law in August that requires lenders to provide homeowners and the state's commissioner of banks a 45-day notice prior to filing a NOD. NODs drop 66 percent in North Carolina in September.
But new legislation isn't having a positive effect on every state. Initial foreclosure filings in Massachusetts jumped 465 percent from August to September after being much lower than normal in June, July and August. That temporary lull happened after a new law took effect in May requiring lenders to give homeowners a 90-day right to a cure notice (grace period) before initiating foreclosure. But in September, about 90 days after the law took effect, initial foreclosure notices jumped back up close to the level earlier in the year.
Top foreclosure states
Nevada continued to document the nation's highest state foreclosure rate in September due to an 11 percent increase in foreclosure activity from the previous month. Foreclosure filings were reported on 13,022 Nevada properties during the month, an increase of 137 percent from September 2007 and one in every 82 housing units - more than 5 times the national average.
A 9 percent month-over-month increase in foreclosure activity helped Florida's foreclosure rate leapfrog past foreclosure rates in Arizona and California to take the No. 2 spot, with one in every 178 housing units receiving a foreclosure filing in September. Foreclosure filings were reported on 47,956 Florida properties during the month, an increase of 44 percent from September of 2007.
Foreclosure filings were reported on 69,548 California properties in September, a 32 percent decrease from the previous month but still up 36 percent from September 2007. With one in every 189 housing units receiving a foreclosure filing during September, the state's foreclosure rate slipped to third highest among the states.
Other states with foreclosure rates ranking among the top 10 in September were Arizona, Georgia, Michigan, Ohio, New Jersey, Indiana and Colorado.
California alone accounted for six of the top 10 metropolitan cities with foreclosures, with Stockton, CA, taking the top spot with 3.69 percent of its housing units receiving a foreclosure filing during the quarter. Other California cities in the top 10 for foreclosure rate were Riverside-San Bernardino at No. 3, Bakersfield at No. 4, Sacramento at No. 7, Fresno at No. 9 and Oakland at No. 10.
Former U.S. Federal Reserve Chairman Alan Greenspan told Congress on Thursday that stabilization of U.S. housing markets - a necessary precondition for the economy to heal - is "many months in the future." Other economists say that in a best-case scenario, the housing market should bottom out by June 2009, while the worst-case outlook points to the summer of 2010.
Want detailed advice on avoiding foreclosure or buying a foreclosure home? Homescape's Foreclosure Guide will guide you through the entire process. And learn more about your new community on our local Snapshot pages.
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