In May,
foreclosure starts outnumbered
foreclosure sales by a near 3-1 ratio, according to a report from Lender Processing Services.
Even
though foreclosure starts and sales saw similar monthly increases in May, 11.6
percent and 10 percent respectively, the actual number of foreclosure starts
was significantly higher than foreclosure sales. Foreclosure starts numbered
202,707 while foreclosure sales totaled 73,439.
Weitz – I’d love to hear
from the folks that claim real estate is recovering and get their spin on this. The reality is
that we cannot and will not have a sustainable recovery in real estate or
otherwise until the distressed real estate situation tempers out. There are
still far too many people that owe much more than their homes are worth and I strongly believe that the
foreclosures and short sales will be on a drag on pricing for some time.
Also,
foreclosure inventory maintained historically high levels at 4.14 percent.
LPS Applied Analytics SVP Herb Blecher said the situation is more
nuanced when looking at the breakdown between states that apply judicial versus
non-judicial foreclosure processes.
“There’s
a stark contrast in foreclosure inventories between judicial and non-judicial
states,” said Blecher. “In the former, 6.5 percent of all loans are
in some stage of foreclosure – that’s more than 2.5 times the rate in
non-judicial states where only 2.5 percent of loans are currently in the
foreclosure pipeline.
Blecher added both figures are significantly higher than the
pre-crisis average of 0.5 percent, but noted the average yearly decline in
non-current loans for judicial states is less than one percent compared to 7.1
percent in non-judicial states.
Unlike non-judicial states, lenders must receive court approval
before initiating a foreclosure. This leads to a longer timeline for when
foreclosures actually exit the pipeline.
In non-judicial states, foreclosure sales were three times
greater than in judicial states, with 6.46 percent of foreclosure inventory
making its way out of the foreclosure pipeline in May compared to only 2.14
percent in judicial states. Judicial states also hold a much higher percentage
of past due loans that are more than two years old. In judicial states, about
53 percent of loans in foreclosure have been delinquent for more than two year
compared to just over 30 percent of loans in non-judicial states.
Weitz – this non-judicial situation is good for
Washington, and I will note that the Foreclosure Fairness Act has done a nice
job of reducing foreclosures, and slowing down the foreclosure pipeline. That said, it does solve the underlying problem that the foreclosure pipe line still enormous.
At 7.2 percent, delinquencies in May were up slightly by 1.1
percent, but down almost 12 percent a year ago.
LPS uses loan-level residential mortgage data and
performance information on nearly 40 million loans for its monthly report.
For more information on your rights in Foreclosure or Short
Sale, consider contacting a Seattle Foreclosure Attorney.
Our Firm
Weitz Law Firm, PLLC
520 Kirkland Way, Ste 103
Kirkland, WA 98033
425.889.933
