Mortgage Default Filings Climbed 33% in August

Default notices sent to delinquent U.S. homeowners climbed 33% in August from the previous month as lenders began to speed up the foreclosure process after almost a year of delays. A total of 78,880 first-time default notices were filed in August, the most in nine months, while total foreclosure filings, which also include auction and home-seizure notices, increased to 228,098, up 7% from July.

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Still, foreclosure filings dropped for the 11th straight month on a year-over-year basis. Claims of “robo-signing”, or pushing through documents that weren’t properly verified, led to investigated by state attorneys general into foreclosure practices back in October, slowing down the foreclosure process. However, paperwork delays are now easing a the industry works to settle the probe. According to Rick Sharga, senior vice president at RealtyTrac, foreclosure filings this year have been “artificially low” and now the “logjam may finally be breaking up”.

While August filings climbed 33% from the month earlier, they declined 33% from the year earlier. On a year-over-year basis, default notices fell 18% and scheduled auctions fell 43%, also declining 1% from the previous month. Lenders seized a total of 64,813 properties last month, down 4% from July 2011 and down 32% from August 2010. However, the jump in default notices means repossessions will probably increase in the coming months. Default notices increased by 55% on a month-over-month basis in California, increased 46% in Indiana, and 42% in New Jersey. Scheduled auctions, which in some states serve as the first step in the foreclosure process, climbed 51% in Colorado, 22% in Georgia, 20% in Arizona, and 19% in Oregon.

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Nevada had the highest foreclosure rate at one in every 118 households, followed by California at a distant second with one in 226 households receiving a foreclosure filing, then Arizona at one in 248. Rounding out the top ten were Georgia in fourth, then Idaho, Michigan, Florida, Illinois, Colorado, and Utah. In terms of total filings, California led the pack with 59,383, followed by Florida with 23,569 and Michigan with 13,016. Illinois came in fourth and Georgia in fifth. The five states accounted for 53% of all foreclosure filings in the country last month.