Dramatic Foreclosure Rate Decline

April 15, 2011 / Russell Legato, Residential Property Analyst

The number of foreclosure notices filed during the first quarter this year declined by 30 percent from the first quarter last year, reported RealtyTrac, an online marketplace of foreclosure properties, on Thursday, April 14, 2011.

Dramatic Foreclosure Rate Decline

Only one for every 191 households or an overall total of 681,000 properties were hit with the foreclosure notices last quarter.

The decrease, however, had something to do more with processing problems that stall foreclosures and backlogging banks and mortgage companies than a recovering economy.

Late last year, foreclosure filings slowed because it was discovered that some mortgage company staffers, or robo-signers, approved thousands of foreclosure documents without reading them.

The situation is said to explain how foreclosure rates improved though other housing metrics, such as home prices and the sales of existing and new homes declined.

RealtyTrac spokesman Rick Sharga said that without the cutback caused by robo-signers, there would have been 900,000 filings during the quarter instead of 681,000 and there would have been 280,000 to 300,000 bank repossessions instead of 215,000.

The drop in foreclosure rates was widespread because it affected all the 20 hardest-hit metro areas.

Nevada, Arizona and California ranked as the top three states with the highest foreclosure rates for both the quarter and for the month of March.

The wronged house owners are to be compensated. Federal bank regulators announced on Wednesday, April 13, 2011, that the nation’s 14 largest mortgage firms such as the Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial will be made responsible for taking foreclosure shortcuts last year.

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