Annual foreclosure filings dip in 2013

January 21st, 2014

Mortgage performances is improving as there were fewer foreclosure filings and starts in 2013.

Foreclosure filings in 2013 fell 26 percent, an indication of stronger mortgage performance.

According to RealtyTrac’s Year-End 2013 U.S. Foreclosure Market Report, total foreclosure filings – which include bank repossessions, scheduled auctions and default notices – for the year were 1.4 million, down from 1.8 million in 2012. The recent figure was also a 53 percent drop from the 2.9 million peak set in 2010.

“Millions of homeowners are still living in the shadow of the massive foreclosure crisis that the country experienced over the past eight years since the housing price bubble burst – both in the form of homes lost to directly to foreclosure as well as home equity lost as a result of a flood of discounted distressed sales,” said RealtyTrac Vice President Daren Blomquist.

He also stated that lower numbers of distressed properties entering the foreclosure process and higher numbers of properties exiting the process bode well for lowering the total foreclosure inventory.

The report noted that total foreclosure filings for 2013 were near the lowest level seen since 2007 – 1.3 million. Additionally, there was a decline in the proportion of U.S. housing units with at least one foreclosure filing in 2013 – down to 1.04 percent of all housing units from 1.39 percent in 2012 and 2.23 percent during the peak in 2010.

Judicial states still skew the data
States that have a judicial process for scheduling foreclosure auctions have been responsible for slanting the data on foreclosure filings and starts throughout the housing recovery. Blomquist stated that the effort to cut down backlogged auctions is beneficial for lenders and owners of the properties, who have a chance of seeing a higher payout if these homes sell while prices are up.

Foreclosure starts slip in 2013
RealtyTrac also noted a drop in annual foreclosure starts. In 2013, 747,728 U.S. properties entered the foreclosure process, a 33 percent decline from 2012 as well as the lowest level since the report’s creation. Thirteen states showed annual increases despite the national decline, including Maryland (up 194 percent), Arkansas (up 64 percent) and New Jersey (up 54 percent).

California had the most significant decline in foreclosure starts – 60 percent. Other notable states for decreases were Arizona (59 percent), Colorado (58 percent) and Georgia (48 percent). Florida, a judicial state that has seen some of the strongest foreclosure activity since the housing downturn, saw a 31 percent drop in starts.

December starts data
In December, there was a 1 percent month-over-month decrease for foreclosure starts. Year over year, starts fell 28 percent. There were 28 states with month-over-month increases for starts, including Oregon (52 percent), California (19 percent) and Arizona (13 percent ).

Slowed REO activity
2013 also saw a drop in activity for bank repossessions, with a total of 462,970 U.S. properties repossessed, a 31 percent decrease compared to 2012 and the lowest level since 2007. The national trend was prevalent in 38 states, including California (60 percent), Texas (56 percent) and Arizona (52 percent).

Increases in REO activity were seen in Maryland (57 percent), Arkansas (percent), Washington (30 percent) and nine other states.

There was a 40 percent drop year over year in December for REOs. However, there was a 4 percent rise month over month.

Encouragement for homeowners and homebuyers
The data hints that homeowners are having an easier time staying current with their mortgage. Consumers who have been considering a home purchase may see this as a sign that buying a home is a worthwhile and affordable investment.