PrintWire service reports on RealtyTrac’s July foreclosure filings contributed to an existing atmosphere of investor fear that drove stock futures down before the opening of the New York Stock Exchange this morning.
Nasdaq 100 futures fell 6 points to 1,831.70, and S&P 500 futures dropped 2.50 points to 1,082.50. Futures on the Dow Jones Industrial Average slipped 18 points to 10,319, according to Marketwatch.
An Associated Press story focused on actual repossessions, not total foreclosure activity as measured by filings, and reported that “the number of U.S. homes lost to foreclosure surged in July, another sign that lenders are moving quicker to take back properties from homeowners behind in payments.” Reuters also led with repossessions rather than filings, “More Americans fell into foreclosure in July as a sour job market kept them from making payments, and banks took over homes at a near record pace.”
However, RealtyTrac;s news wasn’t all bad. In fact, it confirmed a trend of declining default, suggesting foreclosures in the months to come.
RealtyTrac reported July total foreclosure filings are up only 4 percent over June and are actually down 9.7 percent from the same month last year, the second straight month of year-over-year declines.
After a 1 percent yearly increase in May, filings declined 6.9 percent on an annual basis in June and the nearly 10 percent drop in July. There were 325,229 properties that received a foreclosure filing in July, a 4% increase from May. It also marks the 17th consecutive month that foreclosure activity exceeded 300,000, said James Saccacio, CEO of RealtyTrac. Saccacio added that default notices were down from the previous year for the sixth straight month in July.
RealtyTrac also reported that though banks are stepping up repossessions of properties in default, new defaults are declining, in line with similar reports from Freddie Mac, Fitch Ratings and ForeclosureListingsNationwide.com. See Foreclosures Show Signs of Decline.
”July marked the 17th consecutive month with a foreclosure activity total exceeding 300,000,” said James J. Saccacio, chief executive officer of RealtyTrac. “Declines in new default notices, which were down on a year-over-year basis for the sixth straight month in July, have been offset by near-record levels of bank repossessions, which increased on a year-over-year basis for the eighth straight month.”
California alone accounted for 21 percent of the national total in July, with 66,910 properties receiving a foreclosure filing during the month - down 3 percent from the previous month and down 38 percent from July 2009, according to the RealtyTrac report. Concern in California is growing that another wave of foreclosures is coming, Sean O’Toole, founder of ForeclosureRadar, reported yesterday.
“We see no evidence of a foreclosure wave anytime soon, and would like to remind everyone that even it were to occur we would see evidence of it months before those homes actually hit the market. While there is clearly a huge “shadow” inventory of homes that are delinquent in their mortgage payments, those homes still have to go through the entire foreclosure process before hitting the market as REO listings. A process which takes a minimum of 120 days, and at the moment an average of 226 days. Even if those properties already in foreclosure, and currently scheduled for sale, were to begin actually going to foreclosure sale (rather than postponing or canceling), it still takes lenders on average 269 days to resell those homes after the foreclosure sale occurs,” wrote O’Toole in his July 2010 California Foreclosure Report.
”Bottom line - we aren’t ruling out a double dip for housing, but at least in California it certainly won’t be caused by an excess supply of foreclosures anytime soon,” O’Toole said.
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