Recent headlines have created
tremendous confusion regarding the foreclosure situation in the country. Let’s
give an example. Which of these two headlines are accurate?
Foreclosure Starts Plunge to
71-Month Low
Foreclosures Increase for
the First Time Since 2010
The challenge is that both
headlines are 100% accurate. How can foreclosures have increased for the first
time in two years and, at the same time, be at a six year low? Each headline
was reporting on a different measurement. Below are the explanations for each
of the measurements as per RealtyTrac’s
most recent Mortgage Foreclosure Report.
Foreclosure Starts
Foreclosure starts are the first
steps taken by the bank after the borrower becomes delinquent on their mortgage
payments (default notices or scheduled foreclosure auctions, depending on the
state). They were filed for the first time on 77,494 U.S. properties in November.
This was:
§ Down 13% from the
previous month
§ Down 28% from November
2011
§ At the lowest level
since December 2006
Foreclosures (Bank
Repossessions)
This is
when the lender completes the foreclosure process and repossesses the property.
This occurred on 59,134 U.S. properties in November. This was:
§ An 11 percent increase
from the previous month
§ A 5% increase from
November 2011
§ The first year-over-year
increase in bank repossessions since October 2010, when the practice of
robo-signing foreclosure documents came to light and caused a sharp slowdown in
foreclosure activity in the following months
In the report, Daren Blomquist,
vice president at RealtyTrac,
explained:
“The drop in overall foreclosure
activity in November was caused largely by a 71-month low in foreclosure starts
for the month, more evidence that we are past the worst of the foreclosure
problem brought about by the housing bubble bursting six years ago. But
foreclosures are continuing to hobble the U.S. housing market as lenders
finally seize properties that started the process a year or two ago — and much
longer in some cases.”
We hope this brings some
clarity to the situation.
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