Foreclosure Filings Plunge In First Quarter As Lenders Get Stuck With Paperwork

Foreclosure filings fell to a three-year low in the first three months of the year, thanks mostly because of stalled paperwork, according to a report released Thursday.

In the first quarter of 2011, home repossession filings were down 30 percent from one year prior to 680,000, RealtyTrac reported. The decrease, however, appears to have less to do with a recovering economy than the processing problems that are stalling foreclosures and backlogging banks and mortgage companies across the country, RealtyTrac says.

Nationally, successful home repossessions fell 17 percent from the same period last year, too, with just over 215,000 in the first three months of 2011. But new foreclosure filings sped up in March, suggesting the total number of foreclosures could still hit 1 million in the U.S. by the end of the year.

That means foreclosures remain a looming threat to further derail an already fragile housing market, RealtyTrac CEO James Saccacio said in a release.

“The nation’s housing market continued to languish in the first quarter, even as foreclosure activity fell to a three-year low,” Saccacio said. “Weak demand, declining home prices and the lack of credit availability are weighing heavily on the market, which is still facing the threat of a looming shadow inventory of distressed properties."

Nevada had the highest foreclosure rate in the first quarter, with one filing for every 35. In Arizona, one in every 60 housing units received a foreclosure notice; in California, it was one in every 80.

Foreclosure filings slowed temporarily at the end of last year when it was discovered that some mortgage company staffers, dubbed robo-signers, had approved thousands of foreclosure documents without reading them, leading some lenders to reexamine their foreclosure cases.

After the revelation, judges in states where foreclosure involves court proceedings -- including New York, New Jersey and Florida -- slowed the process to examine paperwork, with one New York judge throwing out foreclosure cases at the beginning of this year.

In states where judges do not have to review foreclosures, repossessions rose 9 percent in the first quarter of 2011. Some of the biggest annual decreases in foreclosure activity, though, occurred in states where judges were more involved in the foreclosure crisis, according to RealtyTrac, such as in New Jersey (45 percent drop in foreclosures) and Massachusetts (over 60 percent).

On Wednesday, federal bank regulators announced that the nation's 14 largest mortgage firms must compensate wronged homeowners, saying mortgage lenders like Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial systematically broke rules by taking foreclosure shortcuts last year.

Comments

[hairydodger]

12:54 AM on 04/18/2011

With all the foreclosures are we going to have any houses occupied in five years?

[AZreb]

09:55 AM on 04/17/2011

Key word - "delayed" - long enough for the lenders and banks to collect more payments while they work hard to get the paperwork in order for more foreclosures. Giving the homeowners just enough hope to keep making their payments and then in a couple of months there will be a foreclosure notice.

Cynical? No, just predicting the future by looking at the past performances of the lenders and banks.

[christosintpa]

10:11 AM on 04/15/2011

This works to the banks advantage. 1. It artificially keeps home values high. 2. It allows banks to artificially keep their loan losses low and their balance sheets healthy. THE BANKS ARE USING ENRON ACCOUNTING TO HIDE BAD LOANS OFF THEIR BALANCE SHEETS. They are INSOLVENT. However, they are able to borrow money for 0% and lend it out at 30% and thus post profits. The whole system is a complete fraud. Banks get bailed out from tax payer funds, yet do nothing to help the consumer/tax payer...Makes perfect sense to me...The Frank Dodd Financial Reform Bill legalized fraudulent accounting for financial institutions. But "the economy is getting better" yeah right it is a smoke and mirrors accounting that benefits the too big to fail banks. They should be allowed to fail and their assets should be handed out to the local community banks who did not perpetrate these crimes against tax payers.

[Darlie Brewster]

08:40 AM on 04/15/2011

Years too late!

[Realtors Are Liars]

07:33 AM on 04/15/2011

There's a simple answer to this...

Get out of the way of collapsing housing prices. Let them collapse.

[SWilkin676]

07:31 AM on 04/15/2011

Maybe the banks are too busy suing credit card defaulters. There's a new "robosigners" scandal brewing. The credit card companies are suing consumers using cookie cutter suits that don't even include any affidavits of debt - not even a robosigned one! These suits are boilerplate and consumers who can't afford a lawyer are easy default wins and no one cares that the lawsuit wasn't properly prepared. In some cases people are being sued for debts which are not their own, you know how careful banks are checking identity etc. There's some heart rending letters written by elderly widows or out of work folks but the courts don't care, they issue summary judgements anyway.

[iam99]

06:20 AM on 04/15/2011

Multiple bankster initiated frauds should not be given sway over the hard-working people's efforts to obtain a placeto live.

The U.S. must be the biggest joke to those outside of the country watching all of this. Who would opt-in to this big fetid pile?

[BonnieDoon]

05:15 AM on 04/15/2011

Wrong thread or just off topic?

[PilgrimMom]

03:02 AM on 04/15/2011

Found this article on Bloomberg after reading the one BonnieDoon suggested in her earlier comment:

"Fixing the broken foreclosure process will be “messy” but is necessary to restore integrity to the system, John Walsh, acting Comptroller of the Currency said."

http://www.bloomberg.com/news/2011-04-14/walsh-says-fixing-mortgage-servicing-problems-will-be-messy-.html


These guys just don't get it. Their solution is like putting a Band-aid on a severed arm. What is it going to take to put the real culprits, the banksters, behind bars? It is not OK that the homeowners are punished and penalized more than bankers that committed fraud and caused the Financial Meltdown.

There is something seriously wrong.

[Paul Sta]

06:57 AM on 04/15/2011

There is no fix, criminal acts were committed, criminals need to go to jail.

[CanadjunBeef]

01:33 AM on 04/15/2011

It wasn't bad enough taxpayers had to bail out the banks. The saved banks then took short-cuts to foreclose with shoddy or even fraudulent paperwork!

[BonnieDoon]

02:07 AM on 04/15/2011

“ “The term sheet’s principal reduction proposals may actually foster an unintended ‘moral hazard’ that rewards those who simply choose not to pay their mortgage -- because they can simply take advantage of lenders’ obligation to honor virtually automatic principal writedowns,” according to a March 22 letter to Miller signed by the attorneys general of Virginia, Texas, Florida and South Carolina.”

Iowa Attorney General “Miller’s 50-state coalition began to fracture last month when a 27-page list of proposed settlement terms leaked and at least seven Republicans attorneys general, including Florida’s Pam Bondi and Virginia’s Kenneth Cuccinelli, came out against it. New York Attorney General Eric Schneiderman said April 11 that a settlement shouldn’t preclude individual states from investigating servicers.”

From by Prashant Gopal at Bloomberg:

"U.S. Foreclosure Settlement Muddies Outlook for Mortgage Relief From Banks"

http://www.bloomberg.com/news/2011-04-14/u-s-foreclosure-settlement-muddies-outlook-for-mortgage-relief-from-banks.html

[PilgrimMom]

02:27 AM on 04/15/2011

“moral hazard’ that rewards those who simply choose not to pay their mortgage -- because they can simply take advantage of lenders’ obligation to honor virtually automatic principal writedowns,”

These guys can’t be serious - the only “moral hazard” is that the Feds and State Attorneys General haven’t slapped cuffs on the Banksters and sent them to the slammer throwing away the key for the fraud they’ve committed on homeowners and the global investment community.



“moral hazard”, my foot!
( I’m trying really hard here to be appropriate )

[Foodgrade]

11:03 PM on 04/14/2011

Bottom feeders unite! We made billions stealing the money out of the housing industry. Now vacuum up the leavings and start the entire con over again. Times are good!

[Realtors Are Liars]

10:46 PM on 04/14/2011

Prepare for the tsunami of housing inventory to hit the market now that the nonsense delays and moratoriums expire.

[IMissAmerica]

08:02 AM on 04/15/2011

Fanning you for your handle. I like to refer to them as "real estate weasels".

[Realtors Are Liars]

08:59 PM on 04/15/2011

likewise.

[patches12]

10:35 PM on 04/14/2011

wasn't Obama supposed to stop this???

[Foodgrade]

11:01 PM on 04/14/2011

Obama was supposed to do a lot of things. But all he does is posture and grease the skids for the Corporations.

[SorenK]

08:12 AM on 04/15/2011

And ask for money.

[SorenK]

08:12 AM on 04/15/2011

Now I know you are joking.

[jujubees]

08:17 AM on 04/15/2011

He does seem to ask for an awful lot of money...If he gets really desperate, he can tap the Bank of Soros again.

Meanwhile, what is this article really stating? That foreclosures are still happening at such a pace that the banks underestimated the number of people they'd need to process them? Hey, here's a completely random thought. Hold a lottery and give people who are facing foreclosure work an actual job processing paperwork. If nothing else, it's a few less homes that will actually need to be foreclosed on.

[james rimes]

10:06 PM on 04/14/2011

After the Linda Green Forclosing mills..What paper contract could a bank produce that would be condidered VALID..

Signed,
Linda Green
Bob Smith
Good Beneficiary...xyz LLC.