Foreclosure filings fell 35 percent marking the 10th straight month of year-over-year declines -- the lowest monthly total since November 2007, according to a monthly report by RealtyTrac. The steep drop, however, is not based on a recovery but on short-term interventions and delays in foreclosure processes. As many as one million foreclosures that should have taken place in 2011 will be delayed until 2012, or perhaps even later, according to RealtyTrac experts.
“It appears that the foreclosure processing delays, combined with the smorgasbord of national and state-level foreclosure prevention efforts — including loan modifications, lender-borrower mediations and mortgage payment assistance for the unemployed — may be allowing more distressed homeowners to stave off foreclosure,” said James Saccacio, chief executive officer of RealtyTrac, in a statement.
Foreclosure filings in July decreased 4 percent from June to 212,764 properties. The report also shows one in every 611 U.S. housing units had a foreclosure filing during July.
Nevada posted the nation’s highest state foreclosure rate for the 55th straight month in July, with one in every 115 housing units receiving a foreclosure filing during the month, for a total of 9,930 properties.
Sales of foreclosed and bank-owned properties are largely responsible for lower home prices, which experts say will keep falling through 2011 and into 2012 at the earliest. Foreclosures typically sell at a 20 percent discount, on average, and add downward pressure on home values.
Home prices fell sharply earlier this year due to the sale of large number of foreclosures, but those sales have now leveled off. In a recent report from Zillow, the real estate listing and online information service, home values had their smallest decline in more than four years during the second quarter, but remain nearly 30 percent below the peak of June of 2006.
Experts say there won’t be a real turnaround in the battered housing market until jobs and household incomes increase. While July’s jobs report was a slight improvement over June, with employers adding 117, 000 new jobs, it’s not enough to shore up business confidence enough to start hiring.
The continued decline in foreclosures comes as the Obama administration published a “request for information” on Wednesday, soliciting ideas from investors on how to deal with the rising volumes of foreclosed properties and boost home prices. The administration suggests converting approximately 300,000 government-owned foreclosures held by Fannie Mae, Freddie Mac and the Federal Housing Administration into rental homes, an idea that is slowly gaining traction. The deadline for responses is September 15.
Turning government-owned foreclosures into rental properties might help the tightening rental market. Nearly 39 million U.S. households are renters right now, and population trends should lift that number by more than 3.6 million over the next decade, according to the Harvard University Joint Center for Housing Studies.
