Foreclosures up 14 percent
Increase in first-time warnings means banks acting on defaults
LOS ANGELES – More U.S. homes are entering the foreclosure process, but they’re taking ever longer to get sold or repossessed by lenders.
The number of U.S. homes that received a first-time default notice during the July to September quarter increased 14 percent compared to the second quarter, RealtyTrac Inc. said Thursday.
That increase signals banks are moving more aggressively now against borrowers who have fallen behind on their mortgage payments than they have since industrywide foreclosure processing problems emerged last fall. Those problems resulted in a sharp drop in foreclosure activity this year.
The surge in default notices means homeowners who haven’t kept up their mortgage payments could now end up on the foreclosure path sooner. Initial default notices are a first step in the process that can eventually lead to a home being taken back by a lender.
A pickup in foreclosure activity also means a potentially faster turnaround for the U.S. housing market. Experts say a revival isn’t likely to occur as long as there remains a glut of potential foreclosures hovering over the market.
The jump in initial defaults during the July to September period is significant because it is the first increase after five consecutive quarterly declines, suggesting banks are gradually addressing their backlog of homes in foreclosure and are now beginning to move on more recent home loan defaults, said RealtyTrac CEO James Saccacio.
In the third quarter, it took an average of 336 days, or 11.2 months, for a U.S. home to go from receiving an initial notice of default to being foreclosed by a lender, RealtyTrac said.
That’s up from 318 days, or 10.6 months, in the second quarter and represents the largest average span of time for the foreclosure process since the first quarter of 2007, the firm said.