Lenders repossess fewer homes
November total drops after many banks freeze foreclosures
LOS ANGELES – The number of U.S. homes taken back by lenders dropped to the lowest level in 18 months in November, the result of foreclosure freezes enacted by several banks following allegations that evictions were handled improperly.
Home repossessions dropped 28 percent from October and 12 percent from November last year, foreclosure listing firm RealtyTrac Inc. said today.
The 67,428 homes lenders took back last month were the fewest since May 2009. But even with the decline, it was enough to push the total number of repossessions so far this year to more than 980,000 – the highest annual tally of properties lost to foreclosure on RealtyTrac’s records dating back to 2005.
“It’s almost impossible to imagine that we won’t break a million” for the year, said Rick Sharga, a senior vice president at RealtyTrac. “Unfortunately, it’s a record that we’ll probably break again next year.”
Banks had been on pace to take back up to 1.2 million homes this year before problems with foreclosure documents surfaced in late September.
Several lenders responded to heightened scrutiny over the foreclosure process by temporarily ceasing taking action against borrowers severely behind in payments while they checked to see if their employees made errors in loan documents needed to complete foreclosures.
Lenders’ initial freeze and slow ramp-up in foreclosure activity likely caused the sharp decline in foreclosure-related notices sent to households last month. And it’s likely to cause another drop in December, Sharga said.
But activity will likely pick up in the new year.
Banks’ foreclosure document problems aside, many of the factors that have contributed to the foreclosure crisis are likely to be present next year and should continue to drive foreclosures.
Among them: high unemployment, a weak housing market, flat-to-falling home values and tighter lending standards making it tougher for buyers to qualify for financing.
In addition, there are some 5 million mortgages that are at least two months past due, and many of them have yet to enter the foreclosure process.
About 10.8 million households, or 22.5 percent of all homes with a mortgage, were under water in the July-September quarter, according to housing data firm CoreLogic. The figure is down from 23 percent in the second quarter, mainly because more homes fell into foreclosure and not because home prices increased.