RealEstateEconomyWatch.com

Inventories of bank-owned foreclosures for sale vary increasingly by state as the latest local data suggests that lenders are beginning to release a long-awaited wave of more than one million backlogged foreclosures, primarily in states where a court order is required to foreclose, known as judicial states.

REO sales in the first quarter were down nationwide from a year ago but up significantly in judicial states as lenders begin to market the 1.4 million unit backlog of foreclosures that piled up in pre-foreclosure and foreclosure inventories in the 18 month period following the outbreak of the Robogate scandal.

The result is a feast-or-famine market for foreclosures and REOs determined not by marketplace forces but the state laws that make the foreclosure process more complicated and lengthier in some states than others.

Realty-Trac’s Foreclosure Sales Report found that third parties purchased a total of 123,778 bank-owned (REO) homes in the first quarter, up 2 percent from the previous quarter but down 15 percent from the first quarter of 2011. REO sales accounted for 14 percent of all sales in the first quarter, up from 13 percent of all sales in the previous quarter but down from 15 percent of all sales in the first quarter of 2011.

“Meanwhile the average price of a bank-owned home is stabilizing and even increasing in some areas where a slowdown in REO activity over the past year has resulted in a restricted supply of REO homes available,” said Brandon Moore, RealtyTrac CEO. “Still, REO sales did increase on a quarterly basis in 21 states, indicating that lenders are still working through a bottleneck of unsold REO inventory in many areas.”

REOs sold for an average price of $147,995 in the first quarter, down less than 1 percent from the previous quarter and up 2 percent from the first quarter of 2011. The average sales price of a bank-owned home in the first quarter was 33 percent below the average sales price of a non-foreclosure home, down from a 34 percent discount in the fourth quarter and a 37 percent discount in the first quarter of 2011. REOs that sold in the first quarter took an average of 178 days to sell after completing the foreclosure process, up from 175 days in the fourth quarter and 176 days in the first quarter of 2011.

REOs Soar in Judicial States

Evidence is mounting that lenders are releasing bloated inventories of foreclosures in judicial states. RealtyTrac reported that in the first quarter some twenty-one states posted a quarterly increase in REO sales, including Oregon (41 percent), North Carolina (23 percent), Ohio (21 percent), Florida (13 percent) and Wisconsin (13 percent). All except Oregon are judicial states. Metro areas with the biggest annual increases in REO sales were Minneapolis (33 percent), Boston (30 percent), Philadelphia (22 percent), Atlanta (15 percent), and Chicago (13 percent). All except Atlanta are in judicial states.

More recent reports from judicial markets suggest that the release of REOs into local markets has increased in April and May.

Florida

Florida still leads the nation in the percentage of home mortgages that are in foreclosure, according to CoreLogic’s foreclosure report for April.

According to the most recent data, 12 percent of Florida’s mortgages were in foreclosure in April. New Jersey ranked No. 2 with 6.7 percent of its mortgages in foreclosure, followed by Illinois with 5.3 percent; Nevada with 5.0 percent; and New York with 5.0 percent.

The five states that logged the most completed foreclosures for the year ended in April 2012 were California with 142,000; Florida with 92,000; Michigan with 60,000; Texas with 58,000; and Georgia with 57,000, CoreLogic said. (Miami Herald)

Illinois

For 2012, month after month foreclosures have been steadily rising each month throughout the six counties of Cook, Will, Kane, Lake, McHenry, and DuPage. The stats compiled by Illinois Foreclosure Listing Service for April 2012, however, show that this steady increase has come to an end. In April, all of the seven Chicago land counties showed a decline in foreclosure activity. The total number of home foreclosure filings for the seven counties for March was 6,411. This is slightly higher than the total for April which reached only 6,279. This is an overall decrease of about 2%. This total is an increase from last year, however, when in April 2011 foreclosure filings were at only 5,641. Comparing April 2011 to April 2012, there was a 22.06% increase in foreclosure activity during that particular month. (Illinois Foreclosure Listing Service)

New York and New Jersey

While there was a year-over-year decline in completed foreclosures across the nation, New York and New Jersey again ranked among the five states with the highest foreclosure inventory rate in April 2012, according to data released today by CoreLogic. In fact, the foreclosure inventory rates in both New York and New Jersey increased slightly month-over-month.

Foreclosure inventory rate is the foreclosure inventory as a percentage of all mortgaged homes. Many have speculated that the number of foreclosed properties is growing in New York because of a large backlog of distressed properties created by the state’s slow judicial process.

New York’s foreclosure inventory rate now comes in at an even 5.0 percent, as opposed to last month’s 4.9 percent, which ties the state with Nevada for the fourth highest rate in the nation. New York’s foreclosure inventory rate gained 0.9 percent in percent point change since April 2011. There were a total of 3,524 completed foreclosures in the state for the year ending April 2012.

In the New York City-White Plains, N.Y.-Wayne, N.J. region, CoreLogic tallied a 5.6 percent foreclosure inventory rate, which marks a slight increase from last month’s 5.5 percent count. April’s percentage shows a 0.5 percent year-over-year percent point change increase. In total, there were 855 completed foreclosures in the metropolitan area year-over-year, up from last month’s sum of 838. (The Real Deal)

Massachusetts

Massachusetts foreclosure activity in April remained at levels dramatically higher than those recorded last year. In fact, foreclosure petitions, which mark the first step in the foreclosure process in Massachusetts, posted the highest number in nearly two years.

The number of foreclosure petitions statewide rose almost 47 percent year-over-year to 1,750 from 1,191 in April 2011. In the three previous months, petitions have ranged from 1,333 to 1,621. This was the highest level of petitions since September 2010, when there were 2,358 starts. Through April of this year, 6,098 petitions to foreclose have been filed statewide, up 64 percent from 3,726 during the same period in 2011.

“Foreclosure activity was so low last year that we’re inevitably seeing a rise in foreclosures across the state,” said Cory S. Hopkins, editorial director of The Warren Group. “It’s necessary for a wave of foreclosures to work through the system this year, but it shouldn’t cause panic. In order to return to a healthier market, the backlog of distressed properties needs to be cleared from banks’ books.”

Foreclosure deeds, which represent completed foreclosures, increased more than 19 percent to 714 in April from 598 in April 2011. A total of 2,968 foreclosure deeds have been recorded in the first four months of the year, up 30.5 percent from 2,275 a year earlier.

The number of advertised auction notices dropped slightly in April. There were 1,354 auction announcements in April, down 2 percent from 1,382 a year ago. Year-to-date auction notices are up 18 percent to 5,528 from 4,675 last year. (The Warren Group)

Maryland

In Prince George’s County — ground zero in Maryland’s foreclosure crisis — home values have plunged 52 percent since their peak in 2006, according to Metropolitan Regional Information Systems Inc. As a result, most homeowners in the nation’s wealthiest majority-minority county say they owe more on their house than it’s actually worth.

The county had three times as many foreclosures as neighboring Montgomery County during the first three months of the year. In April, Prince George’s foreclosure activity improved 25 percent, but it still topped all other local counties, with 366 foreclosures.

In the state as a whole, the average sales price fell more than 4 percent to $267,983 in the first quarter compared with the previous quarter. The state’s foreclosure activity increased 21 percent during the period. (Washington Examiner)

Maine

A new report out Wednesday finds that 4.3 percent of all Maine homes with a mortgage were in the foreclosure process in April, the second highest rate in New England.

That is up slightly - by 0.1 percent - over the same period a year ago, according to the CoreLogic FCL report that came out Wednesday. The report noted that 212 homes in Maine had been foreclosed on in the 12 months ending in April.

Nationally, 3.4 percent of homes with a mortgage - or 1.4 million homes - were in the foreclosure process in April.

Regionally, the state with the highest percentage was Connecticut at 4.6 percent. Maine came in at 4.3 percent, followed by Rhode Island at 3.2 percent, Vermont at 2.5 percent, Massachusetts at 2 percent, and New Hampshire at 1.5 percent. (Bangor Daily News)