Foreclosure starts shot up 28 percent in January, according to a report by data provider Lender Processing Services (NYSE:LPS) on Tuesday, suggesting that backlogs that had lenders cutting back over the past several months were rapidly clearing. Of the nearly 50 million active mortgages serviced by the nation’s largest lenders, the LPS database represents about 70 percent.
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The foreclosure rate in the U.S. was shrinking last year as lenders worked through documentation problems that had led to legal challenges, giving a false read on the housing market’s recovery. However, now that the backlog of paperwork is clearing, lenders have ramped up foreclosures on delinquent properties.
Foreclosure sales also surged in January, up 29 percent from the previous month. A foreclosure sale indicates a bank has either repossessed a home from the borrower or, in some cases, a short sale has been completed.
Though foreclosures were up, mortgage delinquencies were actually down in January, more than 25 percent below their January 2010 peak, according to the LPS report. The delinquency rate stood at 7.97 percent in January, down 10.5 percent from a year earlier.
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