Foreclosures fell 26% in Dec., but 2010 filings set a record

Here is a quick read about the rate in which foreclosures are being filed. Although it the filings are coming down, the number of foreclosures is still pretty high and we can expect them to be around for a couple of years at least. However, due to the court rulings, lenders and banks are be extra careful about filings, thus it is taking longer to get them out in the market. Also, since the more foreclosures mean lower prices, thus the banks would make less, now it seems the banks will be slowing the output of foreclosures to market in order to NOT artificially lower prices. So, what does that all mean? it means that prices will stop dropping soon and will start to level off. That is great for sellers, but that means time is running out on this buyer's market!

By Julie Schmit

The pace of foreclosures has slowed since revelations that thousands of foreclosure documents may have been improperly prepared, but for all 2010, almost 2.9 million U.S. properties received foreclosure filings, a record high, and up 2% from 2009.

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Nationwide, 1 in 45 homes received at least one foreclosure filing during the year. In December, actual bank repossessions nationwide totaled 69,847, down 24% from December 2009 but up 4% from November.

Foreclosure filings were off 26% last month from December 2009, RealtyTrac reports today. In November, filings were down 14% year over year. The December drop was the biggest in at least five years. December's foreclosure filings are the lowest monthly total since June 2008, RealtyTrac says.

Lenders and mortgage servicers imposed delays on foreclosure processes in October after reports in September that some servicers did not follow legal procedures in tens of thousands of foreclosures. Mortgage servicers say they're resuming stalled foreclosures, but RealtyTrac estimates that up to 250,000 may have been delayed by the controversy. Those foreclosures will likely be restarted and added to the numbers in early 2011, says James Saccacio, RealtyTrac CEO.

The Department of Justice and the state attorneys general are investigating. "Lenders have been spanked. They're spending money to make sure every 'i' is dotted and every 't' is crossed," says Christopher Thornberg, of Beacon Economics. The pace of foreclosures "will pick back up," he says.

Whether it'll go back to the torrid pace of the past is unclear. Some states have recently added speed bumps. New York now requires lawyers for firms bringing foreclosures to sign an affirmation that they reviewed court documents — and asked servicers to verify their accuracy. Since that requirement started in October, foreclosure filings have "dropped like a rock," says Paul Lewis, chief of staff to New York State Deputy Chief Administrative Judge Ann Pfau. They're running about 150 a month, down from 900, Lewis says. He speculates lawyers need time to get information from banks.

In addition to taking longer to make sure paperwork is correct, companies may be slowing foreclosures so that they don't glut the market with homes for sale, which would depress prices, says Patrick Butler, head of asset disposition for Foreclosure.com. They may also be delaying foreclosures to avoid the cost of maintaining properties while others remain unsold, Butler says.