New Foreclosure Filings Fall to Seven-Year Low
NEW YORK ( TheStreet) -- Foreclosure activity fell 27% in September from last year but rose 2% from a month earlier, according to the latest report from RealtyTrac.
Foreclosure filings, which includes notices of default, scheduled auctions and bank repossessions, have declined annually for 36 consecutive months.
There were a total of 376,931 properties with foreclosure filings at the end of the third quarter, down 7% from the previous quarter and down 29% from the year-earlier quarter.
New foreclosure filings or foreclosure starts fell 39% from a year earlier to a seven-year low.
Foreclosure activity started to decline in October 2010 after lenders and servicers were accused of improperly signing off on foreclosure documents in a practice called "robo-signing."
After a moratorium was imposed on foreclosure activity, the five biggest servicers, including Bank of America
States including California and Nevada have since enacted tougher foreclosure laws that have made it increasingly difficult for banks to foreclose on borrowers.
States that follow a judicial foreclosure process, which requires banks to prove the borrower is in default in court, have seen a growing backlog of foreclosures as courts are overwhelmed by the sheer number of cases.
The average time to complete a foreclosure is now 551 days nationwide, up from 526 days in the second quarter and up 44% from 382 days in the third quarter of 2012.
The average time to foreclose in New York takes 1,037 days. New Jersey, Florida, Illinois and Connecticut are also known for particularly long timelines.
"In a healthy housing market foreclosures are rare but streamlined while still protecting the rights of the homeowner," said RealtyTrac Vice President Daren Blomquist. "While foreclosures are clearly becoming fewer and farther between in most markets, the increasing time it takes to foreclose is holding back a more robust and sustainable recovery."
The length of the foreclosure process is one reason why banks have increasingly opted for alternatives such as loan modifications and short sales in recent years, which has helped stem the tide of foreclosures.
Still, foreclosure activity fluctuates widely from month to month as banks work through the backlog of problem loans, with many eventually finding their way to foreclosure.
"The sharp jumps in foreclosure activity in some local markets may come as a surprise to some," Blomquist said. "These spikes in activity demonstrate that while millions of distressed homeowners have been pulled back from the precipice by foreclosure prevention programs over the past several years, once those programs expire or are exhausted, a percentage of these troubled homeowners are still susceptible to falling into foreclosure. In addition even slight economic downturns at the local or regional level can push these homeowners hanging on by a thread over the edge."