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Bank-Repossession Beat Continues in March

For the third month in a row U.S. foreclosure activity registered at more than 50 percent above the level it was at a year ago, according to the March RealtyTrac U.S. Foreclosure Market Report. And for the second month in a row, the number of bank repossessions, or REOs, was up more than 100 percent year over year.

The implication: while significantly more homeowners are falling into foreclosure, there is an even bigger increase in the number of homeowners already in the process who are losing their homes to foreclosure — whether through the typical foreclosure sale mechanism or whether by pre-empting the public foreclosure sale through what is called a deed in lieu of foreclosure.

In the latter case, the homeowner offers to convey ownership of the property to the foreclosing lender. The lender also has to agree to the DIL arrangement, which may involve clearing out other liens secured by the property. But that may be better than the alternative — a costly and lengthy process that will quite likely end with the bank repossessing the property anyway.

The year-over-year increase in bank repossessions was even more dramatic in some states: 619 percent in Arizona; 597 percent in New York; 557 percent in California; and 464 percent in Florida.

View full March report.

Posted: Tue, April 15 2008 2:00 AM by darenb
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Comments

darenb said:

Brian,

We do have this available in table format back to April 2005. Send an e-mail to daren@realtytrac.com and I'll send it to you.
# April 18, 2008 8:51 AM

darenb said:

Gretchen,

While your commnent seems logical at first blush, I don't think those spikes are correlated to the tax deadlines for a couple reasons: first, the numbers here only include mortgage foreclosures, not tax foreclosures; and second, while it would seem logical that homeowners might be forced to start missing mortgage payments because of property taxes, they would still just be going delinquent around the tax deadline, they would not have already lost their home to the bank.

I suppose that some folks already struggling with their mortgage payments might just throw up their hands once they see their property tax bill and do a deed in lieu of foreclosure to their bank. Not sure if that is actually happening. Anyone have ideas?
# April 18, 2008 8:59 AM

darenb said:

Wayne,

At this point RealtyTrac does not specifically track how many pre-foreclosures go to foreclosure; however, to give you a rough idea, I can tell you that 22 percent of the overall foreclosure activity we tracked in March 2008 was bank repossessions (REO). In March 2007, by comparison, 15 percent of the total overall foreclosure activity was REOs.
# April 24, 2008 9:28 AM

darenb said:

Sam,

This is a great question. Although we have not broken down foreclosure data by last sales price, we have broken it down by estimated market value at the time of the foreclosure, and that shows some interesting trends.

Foreclosure activity on properties valued at $500,000 or more represented 10 percent of all foreclosure activity in 2006 and 11 percent of all foreclosure activity in 2007. The number of foreclosure filings on properties valued at $500,000 or more increased 84 percent between 2006 and 2007, compared to a 75 percent increase in overall activity. In the $1 million or over category, the YOY increase was 50 percent.

We may take a look at the sales price data because that will remove the variable of depreciating home values.
# April 24, 2008 9:39 AM

darenb said:

Sam,

As to your question about Manhattan, that market has so far seemed largely insulated from foreclosures, although foreclosure activity there is creeping up. New York County foreclosure activity was actually up 71 percent on a year-over-year basis in March, but the county's foreclosure rate was still well below state and national averages. One in every 9,660 Manhattan properties received a foreclosure filing in March, compared to one in every 538 properties nationwide and one in every 1,554 in New York state.
# April 24, 2008 9:47 AM
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