he pace of foreclosures in the U.S. has dropped since revelations that thousands of foreclosure documents may have been improperly prepared.
In December, U.S. foreclosure filings were off 26 percent from December 2009, RealtyTrac reported. In November, filings were down 14 percent year over year. The December drop was the biggest in at least five years. December’s foreclosure filings are the lowest monthly total since June 2008, RealtyTrac says.
Lenders and mortgage servicers imposed delays on foreclosure processes in October after reports in September that some servicers did not follow legal procedures in tens of thousands of foreclosures. Mortgage servicers say they’re resuming stalled foreclosures, but RealtyTrac estimates that up to 250,000 may have been delayed by the controversy. Those foreclosures will likely be restarted and added to the numbers in early 2011, says James Saccacio, RealtyTrac CEO.
The Department of Justice and the state attorneys general are investigating. “Lenders have been spanked. They’re spending money to make sure every ‘i’ is dotted and every ‘t’ is crossed,” says Christopher Thornberg, of Beacon Economics. The pace of foreclosures “will pick back up,” he says.
Whether it’ll go back to the torrid pace of the past is unclear. Some states have recently added speed bumps. New York now requires lawyers for firms bringing foreclosures to sign an affirmation that they reviewed court documents — and asked servicers to verify their accuracy.
Since that requirement started in October, foreclosure filings have “dropped like a rock,” says Paul Lewis, chief of staff to New York State Deputy Chief Administrative Judge Ann Pfau. They’re running about 150 a month, down from 900, Lewis says.
He speculates lawyers need time to get information from banks.
In addition to taking longer to make sure paperwork is correct, companies may be slowing foreclosures so that they don’t glut the market with homes for sale, which would depress prices, says Patrick Butler, head of asset disposition for Foreclosure.com. They may also be delaying foreclosures to avoid the cost of maintaining properties while others remain unsold, Butler says.
In December, bank repossessions nationwide totaled 69,847, down 24 percent from December 2009 but up 4 percent from November.
For the year, almost 2.9 million U.S. properties received foreclosure filings, a record high, and up 2 percent from 2009. Nationwide, 1 in 45 homes received at least one foreclosure filing during the year.
via US home foreclosure rate took dive at end of year.
