Foreclosures completed by banks rose to a nine-month high in November, but there's some good news: The number of homes starting on the path to foreclosure fell to the lowest level in six years.
In this 2011 file photo, a foreclosed house with sale pending sign is shown in Tigard, Ore. There's good news and bad news on the hosuing front. Completed foreclosures hit a nine-month high in November, but homes starting on the path to forecolsure decreased to the lowest level in six years.
Don Ryan/AP/File
EnlargeU.S. home repossessions rose to a nine-month high in November, even as the number of homes starting on the path to?foreclosure?declined to the lowest level in six years.
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Banks completed?foreclosure?on 59,134 homes last month, an increase of 11 percent from October and up 5 percent from November last year,?foreclosure?listing firm RealtyTrac Inc. said Thursday.
Last month marked the first annual increase in bank repossessions since October 2010, when allegations of abuses by the mortgage industry compelled many lenders to temporarily halt?foreclosures.
But the number of homes entering the?foreclosure?process or scheduled for auction for the first time, so-called?foreclosure?starts, sank to 77,494. That's a decline of 13 percent from October and a drop of 28 percent from November last year, the firm said.
It's also the lowest number of?foreclosure?starts since they hit 72,163 in December 2006.
The combination of declining?foreclosure?starts and a sharp increase in the number of homes taken back by lenders signals that banks are moving to complete?foreclosures?on homes with mortgages that have gone unpaid for a year or two, if not longer.
And it's likely that the borrowers who owned these homes already tried to refinance, get a loan modification or sell the home as a short sale ? when the bank agrees to accept less than what is owned on the mortgage ? but did not succeed, said Daren Blomquist, a vice president at RealtyTrac.
"Now?foreclosure?is the final recourse the banks have to go forward on these properties," Blomquist said.
There are close to 1 million U.S. homes that are in some stage of the?foreclosure?process, and any of those could potentially end up repossessed by a lender.
But several factors are now working to stem, or in some cases merely delay,?foreclosures. That's a stark change from two or three years ago, when the?foreclosure?crisis was more severe.
Mortgage servicers and banks are increasingly favoring short sales as an alternative to?foreclosure. Efforts by federal and state lawmakers to slow down the?foreclosure?process or make loan modifications a more likely option for homeowners also are having an impact. And borrowers are getting better about keeping up with mortgage payments.
The percentage of mortgage-holding homeowners who were at least two months behind on their payments sank in the third quarter to the lowest level in more than three years, according to credit reporting firm TransUnion.
In addition, an improving housing market, rising home prices and stronger hiring likely has helped some homeowners avoidforeclosure.
Even so, bank repossessions remain elevated and on pace to exceed 650,000 this year, according to RealtyTrac. That would be down from 800,000 last year.
"We're seeing more signs of the light at the end of the tunnel, with?foreclosure?starts being down," Blomquist said. "But the market still has to deal with the properties that already started?foreclosure, and that could keep the (bank repossession) numbers stubbornly high the next year."
Also, lenders are still adjusting to new?foreclosure?ground rules set forth in a $25 billion settlement reached in February between five major banks and federal and state government officials over claims that many lenders had processed?foreclosures?without verifying documents.
As banks get a handle on those rules, they may move more quickly against late-paying mortgage-holders, Blomquist said.
All told, banks filed foreclosure-related notices on 180,817 properties last month, down 3 percent from October and down 19 percent from a year earlier.
Foreclosure?activity, which RealtyTrac measures as the number of homes receiving a notice of default, scheduled auction or bank repossession, increased on an annual basis in 23 states and Washington D.C.
At the state level, Florida had the highest?foreclosure?rate of any other state, with one in every 304 households in some stage offoreclosure, or twice the national average.
Rounding out the top 10 states by?foreclosure?rate were Nevada, Illinois, California, South Carolina, Ohio, Arizona, Georgia, Michigan and Indiana.
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