While foreclosure filings fell in November, the number of homes scheduled for bank auctions grew significantly, signaling a coming wave of foreclosures in the New Year.
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RealtyTrac released its monthly foreclosure report on Thursday, which showed filings to have dropped to 224,394 properties in November, a 3 percent decline from October and a 14 percent drop year-over-year.
One in every 579 housing units received either a default notice or underwent a scheduled auction or bank repossession last month. The number of completed foreclosures fell to 56,124 homes, a 17 percent plunge from the year earlier and the fewest since March 2008. Repossessions were off 45 percent from their September 2010 peak, when more than 102,000 homes were lost to foreclosure in a single month.
But foreclosure filings have been only artificially depressed over the past year, as banks have slowed down their processing of paperwork in the wake of the robo-signing scandal. “The banks had taken some of the homes out of the foreclosure pipeline while they cleaned up their books,” said Pat Newport, a housing market analyst for IHS Global Insight.
Now that the paperwork issues have been mostly resolved, repossessions could pick back up. “Despite a seasonal slowdown similar to what we’ve seen in each of the past four years, November’s numbers suggest a new set of incoming foreclosure waves, many of which may roll into the market as REO’s or short sales sometime early next year,” said RealtyTrac CEO James Saccacio.
Among the most telling of RealtyTrac’s data was a jump in scheduled auctions, which grew 13 percent from October to a nine-month high of 96,540 properties.
“Many of the new defaults that started the foreclosure process over the past few months are now being scheduled for public foreclosure auction,” said Saccacio.
However, initial default notices — the first legal papers banks send to borrowers informing them that they have missed at least one payment — fell 8 percent month-over-month, and are down 9 percent year-over-year. That means that, after a surge in the New Year as banks pick up the foreclosure process, numbers might taper off as fewer people become delinquent.
Still, Newport says there are as many as 6 million mortgage borrowers who have missed payments, and given the state of the economy, many of their prospects of catching up are dim. “In most cases, their problems will be resolved through foreclosure,” he said.