According to RealtyTrac’s Year-End 2011 U.S. Foreclosure Market Report, 1.9 million U.S. homes were hit with default notices, foreclosures and other actions last year. That is a 34% decrease in total properties from 2.9 million in 2010. This marked the lowest annual level of U.S. foreclosure activity since 2007.
While on the surface this seems like a positive development, the catalyst for the drop was actually an increase in the time it takes for lenders to process the foreclosures. As a result of the robo-signing controversy, lenders performed a massive review of foreclosure procedures that delayed foreclosure proceedings and created a huge backlog in the pipeline.
�Foreclosures were in full delay mode in 2011, resulting in a dramatic drop in foreclosure activity for the year,� said Brandon Moore, chief executive officer of RealtyTrac. �The lack of clarity regarding many of the documentation and legal issues plaguing the foreclosure industry means that we are continuing to see a highly dysfunctional foreclosure process that is inefficiently dealing with delinquent mortgages — particularly in states with a judicial foreclosure process.
The length of the average foreclosure process increased 24 percent from 281 days in the third quarter of 2010, when lenders began to re-evaluate foreclosure procedures in earnest. The three states with the longest average foreclosure timelines (New York, New Jersey and Florida) employ the judicial foreclosure process and take greater than 806 days to complete a foreclosure.
Lenders are getting more aggressive with the 3.5 million U.S. homes with seriously delinquent mortgages, setting the stage for a big wave of foreclosure action this year.
�There were strong signs in the second half of 2011 that lenders are finally beginning to push through some of the delayed foreclosures in select local markets. We expect that trend to continue this year, boosting foreclosure activity f! or 2012 higher than it was in 2011, though still below the peak of 2010,� Moore said.
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