Foreclosures rise in 26 states
Foreclosures are increasing, ironically, because banks are addressing foreclosures that had been in limbo.
Foreclosure activity surged last month across about half of the nation's states, as banks tackled a backlog of homes with mortgages that had gone unpaid yet remained in limbo due to delays stemming from foreclosure-abuse claims.Skip to next paragraph
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The increase occurred across 26 states where the courts supervise the foreclosure process. In contrast, the 24 states where the courts do not play a role in the process saw activity decline in February, foreclosure listing firm RealtyTrac Inc. said Thursday.
While uneven, the pace of foreclosures is accelerating following a $25 billion settlement reached last month between the nation's biggest mortgage lenders and state officials. The settlement was over the industry's alleged foreclosure abuses.
Major banks temporarily put foreclosures on hold in the fall of 2010 after claims surfaced that lenders and mortgage servicers were processing foreclosures without verifying documents. As a result, many homes that would have normally ended up foreclosed were left in a procedural limbo, particularly in states where courts play a role in the process.
But that logjam has begun to ease, and banks are moving to sort out their roster of problem mortgages.
"We're not just seeing an increase in properties starting the foreclosure process, as we have in previous months, but we're starting to see dramatic increases in properties completing the foreclosure process in many of those judicial foreclosure states," said Daren Blomquist, a vice president at RealtyTrac.
That means potentially more foreclosed homes hitting the market this year that could drag down the value of neighboring homes.
Among states with a judicial foreclosure process, foreclosure activity rose 2 percent last month from January, and climbed 24 percent from February last year, the firm said.
Foreclosure activity across states without a court-supervised process fell 5 percent in February from the previous month and declined 23 percent from a year earlier.
RealtyTrac bases foreclosure activity on filings that signal when a home is in some stage of the foreclosureprocess: an initial default notice, a scheduled home auction or a home repossession, which is when a property goes back to the lender.
Overall, U.S. foreclosure activity dipped 2 percent from January and was down 8 percent from February last year.