Mortgage Default Notices Fall While Repossessions Reach Record In Q3

Even as new mortgage defaults ebb slightly, a tidal wave of foreclosures are coming, and repossessions from last year’s record filings continue to flood the REO inventory. There …

Even as new mortgage defaults ebb slightly, a tidal wave of foreclosures are coming, and repossessions from last year’s record filings continue to flood the REO inventory. There are concerns that if new moratoria last too long, a huge backlog could become another wave of repossessions in the coming months and further ravage housing prices. See the following article from HousingWire for more on this.

A record number of homes in September and the third quarter fell into foreclosure as lenders continue to work through the shadow inventory of distressed properties, according to RealtyTrac, which monitors the filings across the country.

For the month of September, foreclosures increased 3% from August to 347,420 properties. Banks repossessed 102,134 properties in September, the first time REO reached triple digits for a single month.

Foreclosures were filed on 930,437 properties in the third quarter, a 1% dip from last year but a 4% increase from the previous quarter. In the third quarter, one in 139 homes received a foreclosure filing, which includes default notices, scheduled auctions and bank repossessions (REO).

REO for the third quarter reached a new record as lenders took back 288,345 properties, a 7% increase from the previous quarter and up 22% from last year.

Try Gemini Today! 123

The Gemini Exchange makes it simple to research crypto market, buy bitcoin and other cryptos plus earn Up to 8.05% APY!

But as lenders work through the supply of serious delinquent loans, fewer are defaulting. RealtyTrac reported 269,647 default notices in the third quarter, down 22% from the peak in the third quarter of 2009.

“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 Saccacio, CEO of RealtyTrac.

But Saccacio expects REO numbers to drop in the fourth quarter as several lenders work through recent foreclosure problems. Bank of America (BAC: 12.60 -5.19%), JPMorgan Chase (JPM: 38.72 -2.81%) and Ally Financial (GJM: 22.51 -3.22%) each suspended foreclosures in 23 states, where, according to RealtyTrac, 40% of all foreclosure activity takes place.

“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.

But if lenders aren’t able to solve the problem quickly, the shadow inventory of distressed properties will grow, causing more pain to home prices.

For nearly four years, Nevada has posted the nation’s highest foreclosure rate. In the third quarter, one in 29 homes received a foreclosure filing, a 1% increase from the previous quarter but down 20% from a year ago.

Arizona was second for the fifth straight quarter, with one in every 55 houses receiving a filing. Florida was third with one in 56 and California was fourth at one in 70 houses.

In terms of volume, California accounted for nearly 21% of the nation’s foreclosure activity at 191,016 properties even though filings there are down 24% from last year.

This article has been republished from HousingWire. You can also view this article at
HousingWire, a mortgage and real estate news site.

Share This:

In this article

gemini