RealtyTrac: “Lenders foreclosed on a record number of properties in September and in the third quarter"

Five states account for more than 50 percent

of nation’s third quarter foreclosure total

IRVINE, Calif. – Oct. 14, 2010 — RealtyTrac® (realtytrac.com), the leading online marketplace for foreclosure properties, today released its U.S. Foreclosure Market Report™ for the third quarter of 2010, which shows that foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 930,437 properties in the third quarter, a nearly 4 percent increase from the previous quarter but a 1 percent decrease from the third quarter of 2009. One in every 139 U.S. housing units received a foreclosure filing during the quarter.

Foreclosure filings were reported on 347,420 U.S. properties in September, an increase of nearly 3 percent from the previous month and an increase of 1 percent from September 2009. A record total of 102,134 bank repossessions were reported in September, the first time bank repossessions have surpassed the 100,000 mark in a single month.

“Lenders foreclosed on a record number of properties in September and in the third quarter, taking a bite out of the backlog of distressed properties where the foreclosure process was delayed by foreclosure prevention efforts over the past 20 months,” said James J. Saccacio, chief executive officer of RealtyTrac. “We expect to see a dip in those bank repossessions — and possibly earlier stages of the foreclosure process — in the fourth quarter as several major lenders have halted foreclosure sales in some states while they review irregularities in foreclosure-processing documentation that has been called into question in recent weeks.”

Impact of lender foreclosure halts

Foreclosure activity in the 24 judicial foreclosure states most affected by the foreclosure documentation issue accounted for 40 percent of all foreclosure activity in the third quarter and 36 percent of bank repossessions, or REOs.

“If the lenders can resolve the documentation issue quickly, then we would expect the temporary lull in foreclosure activity to be followed by a parallel spike in activity as many of the delayed foreclosures move forward in the foreclosure process,” Saccacio said. “However, if the documentation issue cannot be quickly resolved and expands to more lenders we could see a chilling effect on the overall housing market as sales of pre-foreclosure and foreclosed properties, which account for nearly one-third of all sales, dry up and the shadow inventory of distressed properties grows — causing more uncertainty about home prices.”

Preliminary RealtyTrac foreclosure sales numbers for September show that overall foreclosure sales — including pre-foreclosure sales and REO sales — accounted for 31 percent of all sales during the month. REO sales alone accounted for 18 percent of all sales. Foreclosure sales in the 24 states most affected by the foreclosure documentation issue accounted for 32 percent of all foreclosure sales nationwide, based on the preliminary September data.

Five states account for more than 50 percent of nation’s third quarter total

California alone accounted for 21 percent of the nation’s total foreclosure activity in the third quarter, with 191,016 properties receiving a foreclosure notice — the nation’s largest foreclosure activity total. California foreclosure activity decreased nearly 1 percent from the previous quarter and was down nearly 24 percent from the third quarter of 2009.

Florida foreclosure activity increased 12 percent from the previous quarter and was flat from a year ago, giving the state the second largest foreclosure activity total, with 157,026 properties receiving a foreclosure filing.

With 49,103 properties receiving a foreclosure filing in the third quarter, Arizona posted the nation’s third largest state foreclosure activity total. Arizona foreclosure activity increased nearly 8 percent from the previous quarter but was down 2 percent from the third quarter of 2009.

Illinois posted the nation’s fourth largest foreclosure activity total, with 47,802 properties receiving foreclosure filings, and Michigan posted the nation’s fifth largest foreclosure activity total, with 46,100 properties receiving foreclosure filings. Foreclosure activity in both Illinois and Michigan increased on a quarterly and annual basis in the third quarter.

Other states with foreclosure activity totals among the nation’s 10 highest were Georgia (41,231), Nevada (38,429), Ohio (36,677), Texas (34,187) and Washington (17,670).
RealtyTrac Report