RealtyTrac: Bank Repossessions Up 20% In First Half

Posted by Patrick Barnard on July 20, 2015 No Comments
Categories : Mortgage Servicing

A total of 597,589 U.S. properties saw foreclosure filings in the first half of this year – a decrease of 13% compared to the second half of 2014 and down 3% from the first half of 2014, according to figures released by RealtyTrac.

What's more, there were 304,439 foreclosure starts in the first half – down 4% compared to the first half of 2014 and down 18% compared to the first half of 2006, according to the firm's Midyear 2015 U.S. Foreclosure Market Report.

That's the fewest foreclosure starts in a half since RealtyTrac began tracking the data in 2006.

‘U.S. foreclosure starts have not only returned to pre-housing crisis levels, they have fallen well below those pre-crisis levels and are still searching for a floor, down 4 percent from a year ago,’ says Daren Blomquist, vice president at RealtyTrac, in a release. ‘Loans originated in the last five years continue to perform better than historic norms, with tighter lending standards and more cautious borrower behavior acting as important guardrails for the real estate boom of the past three years.’

Foreclosure starts were at or below pre-crisis levels in 19 states during the first half, according to the report. Among them were California, Florida, Arizona, Georgia and Illinois.

‘The reduction of foreclosures is adding to the limited inventory in the market as a whole and increased appreciation,’ says Greg Smith, owner/broker at RE/MAX Alliance, covering the Denver market in Colorado, where foreclosure starts in the first half were less than half the number of foreclosure starts in the first half of 2006. ‘Today the decline in foreclosures, combined with limited new construction, nominal resale inventory, and delayed entry of millennials in to the buying cycle is contributing to a very robust real estate market for the foreseeable future.’

Meanwhile, bank repossessions during the first half were up 20% compared to the first half of 2014. That's primarily a function of foreclosures moving through the pipeline faster, as volume decreases. It's also a function of the fact that some foreclosures were delayed due to foreclosure prevention actions, including loan modifications, where the borrower re-defaulted.

A total of 209,281 properties were repossessed by lenders in first half – that's up 37% compared to 2006, according to the report.

‘Less-disciplined loans originated during the last housing boom continue to account for the majority of distress still hanging over the housing market, with two-thirds of all loans in foreclosure on loans originated between 2004 and 2008,’ Blomquist notes. ‘An increasing number of these failed bubble-era loans finally exited the foreclosure process in the first half of 2015, resulting in accelerating bank repossessions that are still well above pre-crisis levels along with record-long average foreclosure timelines for properties foreclosed in the second quarter.’

States that had the highest foreclosure rates in the first half were Florida, New Jersey, Maryland, Nevada, Delaware, Ohio, Indiana, South Carolina and Tennessee.

Interestingly, Florida saw its foreclosure activity in the first half decrease 22% from a year ago, while New Jersey saw its foreclosure activity increase 24%.

Atlantic City, N.J., had the highest foreclosure rate among the major U.S. cities tracked in the report. It's foreclosure rate reached 1.70% in the first half – that's one in every 59 housing units. Meanwhile, eight Florida cities ranked in the top 10 for foreclosure activity in the first half.

To view the full report, click here.

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