NEW YORK (TheStreet) -- Nearly 1.5 million properties were in some
stage of foreclosure in the first quarter of 2013, according to a new quarterly analysis of foreclosure
inventory by RealtyTrac.
That is up 9% from a year ago, but is down
32% from the peak in December 2010.
The annual increase in foreclosure
inventory at a national level was caused by a 59 percent jump in pre-foreclosure
inventory.
Pre-foreclosure is the period before the
home is put up for public auction. With short sales on the rise, more homes are
being sold in the pre-foreclosure period.
Inventory of homes scheduled for
foreclosure auction decreased 25 percent and inventory of bank-owned homes
decreased 3 percent.
Fannie
Mae (FNMA), Freddie Mac (FMCC) accounted for 12% of the foreclosure
inventory, followed by Bank of America
(BAC), Wells Fargo (WFC) and JPMorgan Chase (JPM). JPMorgan saw its foreclosure inventory
increase 58% year-on-year.
Smaller servicers who have been gaining market
share from the big banks posted the biggest rise in foreclosure
inventory. Nationstar Mortgage (NSM) saw its foreclosure
inventory more than double.
Foreclosure inventory has been declining as
default rates have
improved due to the economic recovery and banks have increasingly pursued
alternatives to foreclosure such as short sales and mortgage modifications.
Still, the trends in recent months have
been uneven. States that follow a judicial foreclosure process where banks need
court approval to file a foreclosure action against a delinquent borrower
continue to see a rise in foreclosures. The foreclosure process in these states
now runs into several years.
Banks are also still adjusting to new
foreclosure laws enacted at various states, which has slowed down the pace of
foreclosures. But banks are still dealing with elevated levels of problem loans
so while foreclosure activity is heading lower overall, periodic reversals are
likely as banks push foreclosures through the pipeline.
"Delinquent loans that fell into a deep
sleep after the robo-signing controversy in late 2010 are gradually coming out
of hibernation following the finalization of the national mortgage settlement in
April 2012," said Daren Blomquist, vice president at RealtyTrac in a statement. "The settlement provided some
closure regarding accepted foreclosure processing practices, and as a result
lenders have been reviving more of these delinquent loans and pushing them into
foreclosure over the past 12 months, particularly in states where a lengthy
court process has resulted in a bigger backlog of non-performing loans still in
snooze mode."
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