Fewer homes entered the foreclosure process in January than in any month in last three years, RealtyTrac Inc. reports. What's more, homes that received an initial default notice has fallen 27 percent when compared to January 2010.
Why the drop? Lenders are taking longer to foreclose against home owners who have defaulted on their mortgage after coming under fire last fall for “robo-signing” foreclosure paperwork without reviewing it. Many banks halted foreclosures altogether while they reviewed their practices.
While lenders have resumed foreclosures, they’ve done so at a more gradual pace, which has caused the decline in foreclosure-related notices last month, industry experts note. Banks also are letting defaulting borrowers stay in their homes longer.
In Florida, which has battled some of the highest number of foreclosures in the country, the number of homes receiving a foreclosure-related notice last month dropped nearly 16 percent from December and about 54 percent from the same month last year.
But that doesn’t mean the housing market is in complete recovery mode with foreclosures yet, experts warn. About 5 million borrowers are two months or more behind on paying their mortgages. Plus, home repossessions in January increased: Banks repossessed 78,133 properties last month, an increase of 12 percent from December, RealtyTrac says.
Source: “Mortgage Default Notices Slow Sharply in January,” The Associated Press (Feb. 10, 2011)