Home foreclosure proceedings on the rise again
After months of a foreclosure slowdown caused by investigations into improper practices, the nation’s home-repossession machinery is beginning to move again — particularly in states such as California where courts don’t oversee the process.
The number of homes entering the foreclosure process surged 19% in the third quarter compared with the previous quarter in states where foreclosures take place largely outside of the courtroom, according to RealtyTrac, an Irvine information firm. These nonjudicial states include California, Nevada, Arizona, Oregon and Washington.
That increase was higher than in the so-called judicial states, which include New York and Florida, where the number of homes entering foreclosure increased 9%.
"[The banks] are generally working through more of these loans, but the places where they can file the most quickly are going to be the nonjudicial states,” said Celia Chen, a housing economist with Moody’s Analytics.
The increase in new foreclosure proceedings comes as talks over a broad foreclosure settlement by state attorneys general with the nation’s five largest mortgage servicers have experienced setbacks. California recently stepped out of those discussions, declaring it would pursue its own path.
New York, Delaware, Nevada, Massachusetts, Kentucky and Minnesota also have signaled that they were unhappy with the direction of negotiations because they say the legal release from liability being offered to the banks is too broad. New York and Delaware have been cooperating in their own probes separate from the coalition.
Nationally, foreclosure activity — from the default notices that begin the process to seizures of homes — was up slightly in the third quarter, reversing three quarters of declines.
Banks filed actions on 610,337 properties in the third quarter, an increase of less than 1% from the previous quarter but 34% below the same quarter a year earlier. Analysts expect foreclosures to pick up in coming months.
While the number of homes entering foreclosure picked up in the third quarter, those repossessed by banks continued to decline. U.S. home repossessions were down 4% from the prior quarter and were down 32% from the same quarter a year earlier.
Guy Cecala, publisher of Inside Mortgage Finance, said banks were probably waiting for some kind of negotiated settlement before finally beginning to take back homes at a faster clip.
“If the banks had their way, they’d be foreclosing at a much more brisk pace,” Cecala said.
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