Foreclosures Fall To 40 Month Low -- Due To Paperwork Delays, Not Recovery

Foreclosure activity has fallen to a 40-month low, but not because of any recovery in the housing market, a new report finds. Rather, the slowdown comes from massive delays in processing foreclosure paperwork.

In April, overall foreclosure filings -- including default notices, scheduled auctions and bank repossessions -- declined for the seventh month straight to 219,258, a 9 percent decrease from March and a 34 percent decrease from April last year. Banks seized 69,532 homes last month, a 5 percent drop from March, according to data provider RealtyTrac.

“This slowdown continues to be largely the result of massive delays in processing foreclosures rather than the result of a housing recovery that is lifting people out of foreclosure," said James J. Saccacio, chief executive officer of RealtyTrac, in a press release.

Nationwide, foreclosures completed in the first quarter of the year took an average of 400 days from initial default notice to conclusion, up from the 340 days the process took last year and more than twice the average time -- 151 days -- it took to complete a foreclosure in the first quarter of 2007. In some states, that number soared higher. In New Jersey and New York, the average timeframe in the first quarter of this year was 900 days. In Florida, it was 619.

With home prices still falling, a slowdown in foreclosures driven by paperwork delays is bad news for the overall housing market recovery. Home prices hit their lowest point in two years in April, falling 0.7 percent below March 2009 levels, according to a recent report by Clear Capital. Housing experts say the data from RealtyTrac's report does not indicate a reversal of this trend will be quickly forthcoming.

"As the servicers sort out their processing issues and staff up a little that means these homes will end up on the market as a distress sale and that will cause home prices to fall further," said Celia Chen, a housing market analyst for Moody's Analytics. "It delays the problem. It extends the recovery in the housing market,"

Last fall, many of the nation's largest lenders voluntarily halted home repossessions when flawed foreclosure practices came to light. On Wednesday, the Huffington Post reported that HSBC North America Holdings, the 12th-largest mortgage servicer in the U.S., will continue its moratorium on home seizures in some jurisdictions. According to the bank's filings, the bank will not fully resume foreclosing on defaulted borrowers for a number of months. The Obama administration is now pushing for the creation of a federal account to help distressed borrowers and settle ongoing probes into faulty mortgage practices, the Huffington Post reported on Wednesday.

There is still a large stock of homes in distress -- at least 3.7 million homes are in a late stage of the foreclosure process, according to the report -- and housing experts stress that processing these properties as quickly as possible is critical to the recovery of the housing market.

"This is what frees up the economy to make forward progress and allows home prices to rise," said Michael Englund, chief economist at Action Economics. "It will probably take about another year to work our way through the foreclosure mess."

Comments

[Pinmason]

12:42 PM on 06/02/2011

Even with falling prices on homes, don't walk away just yet. The sub prime mortgage lending frenzy helped lead to one of the worst financial downturns in US History and it's not over yet. MERS will eventually prove to be the second catalyst that plunges this country and it's economy into chaos. The Feds did find that MERS had severely mismanaged the company and that MERS and Bank of America were told they had sixty days to clean up their act. Yes this is just a slap on the hand, but it does disclose with certainty that these two financial institutions did not have in place a sound business practice that would demonstrate good accountability. In other words, they didn't practice in good faith. With no accountability, is it any wonder that they can't produce the mortgages needed for a proper and legal foreclosure on homes. This is the true mess and cause of delays in foreclosure proceedings. Of course the Feds are partly to blame, giving their blessing to use Mortgages as triple A securities allowing the thousands of agents that worked for MERS to electronically send Millions of these securities to investors in the blink of of an eye. No Wonder they can't find the Mortgages...with poor accounting and management of the MERS system, they have lost them in the finanancial meltdown. Let's bailout the sixty-five million homeowners with mortgages held by MERS instead of another government bailout of financial institutions. Make them accountable.

[joebhed]

06:24 PM on 05/16/2011

To Kai and Peter007 and any other mortgage banker apologists who claim no fraud existed.
Please see the HEADLINE on both the Front Page and Business Page.
Thazzit.

[OMVCO]

05:43 AM on 05/16/2011

just when we were hoping there might be daylight...

[Dad of Marine]

02:23 AM on 05/16/2011

"The people who signed for liar loans ( lied about their income) and signed up for one or two year one percent interest only loans are just as guilty. They are not the victims"

Oh yes, they are the victims; mortgage finance companies were in many cases, forcing their will on many of these people, using their supposed expertise, that what they were filling out was perfectly ok and that the market would continue to rise and not to worry, you will be getting all of your money back and then some. They took advantage of people who did not understand all of the complexities of the mortgage contractual data. There have been lawyers that have stated with all of their legal expertise, it is still very difficult to understand all of the documents that you sign when you purchase a mortgage.

[Realtors Are Liars]

08:17 AM on 05/15/2011

Walk away from that grossly inflated mortgage payment folks. Housing prices will fall another 50-60% from here and they will never return to the grossly inflated prices of 1998-2008.

[Bethab]

12:31 PM on 05/23/2011

Did it...12 months ago today. Never been happier!

[builderman55]

10:41 AM on 05/14/2011

Notice how these articles about the decline in foreclosures are never followed by: Mortgage foreclosures dropped precipitously due to governments actions to bring mortgage companies, otherwise known as "large criminal enterprises that helped to crash the global economy" to justice?

[georgebarronj]

09:51 AM on 05/14/2011

They loaned lots of money to people who were not qualified to pay the loans back. Cheap, easy money. Then they bundled up these loans and sold them as "mortgage back securities". So when the Ponzi scheme unraveled, no one wanted to own these so they were virtually worthless. To make things even worse the "investment firms" and banks were allowed to use these "securities" as collateral to borrow more money than they were supposedly worth
(at least double). And they were not worth as much as they said they were to begin with. Free markets until Goldman Jacks you up and the other criminals are going down then it is bailout time. Now you know who controls your congress. NOT YOU.

Everyone in the industry knew what was going on and did not care because $$$$$$$$$$$$ !

The people who signed for liar loans ( lied about their income) and signed up for one or two year one percent interest only loans are just as guilty. They are not the victims.

The victims are the rest of us who are honest and now have to suffer with all the crooks.

[muck-raker]

11:43 AM on 05/15/2011

excellent post F&F

[HPfanRJ]

05:07 PM on 05/13/2011

Why do you suppose it is that I want to surrender my deed in lieu of payment, but my bankster refuses to take it?

[muck-raker]

11:44 AM on 05/15/2011

they are thinking that they will get it for less at auctions

[cdecisneros]

06:34 AM on 05/13/2011

Florida is #1 in mortgage fraud. Can you imagaine Scott talking to some on about coming to Florida.
Scott: we have low taxes come to Florida.
CEO what about Schools?
Scott: We cut spending by 10% and so far we have had 370 teachers quits
CEO: Huh? Well what about houseing?
Scott: OH your people will have to watch thier back because we are number 1 in fraud and we just killed abunch of rules that are bad for business.
CEO huh
CEO why does my water taste funny.
SCOTT we put poopy water back in the water
CEO PPSSSSSSSSST
CEO WHAT
CEO do not call us we will call you bye
SCOTT but we have low taxes isn't that the most important thing?

[Kai-HK]

03:16 AM on 05/13/2011

Huffington Post readers must be excited to see that banks and their servicers are being extra careful in making sure that the already extremely low rates of accidental foreclosures has been further remedied, thus reducing accidental foreclosures below their already insignificant nominal levels.

For other responsible consumers and borrowers, it must hearten them to see a time when freeloaders could hide behind the straw-man issue of fraudulent foreclosures coming to an end, with these irresponsible freeloading squatters being kicked out on the street where they belong.

Good to see that process moving into a direction that is win-win for everyone except the fraudulent borrower/squatter who took more than they could comfortably afford.

It is also good to see the writers on HP admitting that the delay in foreclosures caused by spurious attempts by fraudulent borrowers to slow down the process is actually contributing to in ability of the housing market to recover and the broader economy to follow. This will continue until the property rights of the owner, in this case the banks, is upheld and these squatters removed.

Kai

[Christopher Neuhart]

10:08 PM on 05/13/2011

Bank Shill

[Kai-HK]

08:47 AM on 05/14/2011

Christopher:

I will take your terse inability to address any of the points I made above as a tacit admission that I am correct. Name calling always belies an inability to address the issues…which means that I must be right, in your opinion.

Thanks again.

Kai

[joebhed]

03:43 PM on 05/15/2011

Chris,
Me thinks that he thinks the "servicers" who are slowing down the foreclosure process to catch up on "their" paperwork are actually the borrowers who are being foreclosed on.
And, everybody knows this crisis was brought upon us by 'un-creditworthy' borrowers who obviously knew better back then, and who are thwarting this honest-banker-foreclosure process by their ......... .......... power?

In truth, it is unfortunate that there was no borrowers' organization that could interpret the rallying-cry of the fraud-masters - "If the music is still playing, you gotta dance", or suchwhat.

[horseguards]

08:21 AM on 05/15/2011

And what about the "fraudulent" banks?

[muck-raker]

08:56 AM on 05/15/2011

I can not find your other post...but you are right in your thinking.. Goldman has spread a lot of money around....they have alot of folks pointing the finger at them and rightly enough...they are a major problem...they will get a small fine and continue to sabotage our commodity prices/costs....F&F

[Kai-HK]

09:14 AM on 05/15/2011

I am all for fraudulent banking activity being punished commensurate to the crime if it CAN BE PROVEN with more than supposition and unsupported class warfare rhetoric. Can it?

Before I continue, what specific fraudulent activity are you talking about?

Kai

[cyoohoos]

03:08 AM on 05/13/2011

WALK AWAY FROM THESE BAD INVESTMENTS. THEY ARE JUST BUILDINGS

The banks got paid, so let them have it

[munki]

04:13 AM on 05/13/2011

They are not necessarily... HONEST

[Peanut Santiago]

11:36 PM on 05/12/2011

that is sucker punches.

[Peanut Santiago]

11:35 PM on 05/12/2011

Banks and Wall Street, with compliant accomplices (politicians) screwed this up from the beginning.....from deregulation starting around the early 1980's....to the real estate bubble.....to mass foreclosures with poor documentation of ownership.............

They really helped do a number on the American and world economies.

AND it is not being fixed....all the players are STILL pointing fingers at each other and trying to pass on the blame.

America's ordinary people are reeling from so many suck punches.

Aren't there any ADULTS in the house (Congress, etc.)?
Either party?

[killebrewky]

11:33 PM on 05/12/2011

We recently had our house foreclosed and sold with no knowledge it even happening. Then a Constable knocked on our door saying we had to go to Court.The Judge said the ruling was for Citimortgage and pretty much we'd been scammed and had to be out in 5 day's. We took all our paper work from a 3rd part mortgage solution company called The NJS National Juris Solution Corp.well we paid them to get a loan Modification they were in contact with Citimortgage but Citi wouldn't work with them they failed to tell us so we could atleast look for another solution my 11 year old still cries at night in her sleep saying Mommy please I want my house back please why are people so mean. I try hard to keep a straight facebut it hurts me to because i just been in the Hospital when this happen and im stlill sick but we live in my sisters dinning room no tv no nothing a bed and r r we have to walk next door to cook or shower my inlaws live there but you can see it inthere faces that we are not wanted i understand its hard not having your privacy why are there o many people that do people wrong we dont hurt anyone i help people all the time and still bad comes my way :(

[Wendy Davis]

02:32 AM on 05/13/2011

I am sorry you have to go through this.  It is a sad time in America.  Making sense of it only leads to the word greed and the phrase "evil thrives when good men do nothing."   Hang in there.

[userw014]

09:55 PM on 05/12/2011

Yeah. Process those foreclosures as fast as possible and put lots and lots of homes on the market.

And watch the value of housing plummet.

[Realtors Are Liars]

10:45 PM on 05/12/2011

Housing prices will continue plummeting regardless.

[muck-raker]

08:58 AM on 05/15/2011

F&F... I figure another 10% and then stagnate for many years after that...

[Wendy Davis]

02:38 AM on 05/13/2011

Much better to have them sitting empty, with dying landscaping.  We have homes in our neighborhood which have been empty for 1 year, 1 home foreclosed on, purchased and foreclosed on a second time.  Homes are worth 1/2 their value.  Next door to me, the people moved into a 300,000 home that is now valued at 114,000.  This is a meltdown that will takes a decade to contain.

[jabreal00]

11:27 AM on 05/15/2011

Well this is the market correcting from the exuberance of unsustainable speculation of home prices. That house next door should never have been $300K in the first place.