Foreclosures Down 7 Percent
RealtyTrac reported Thursday that fewer US homes were in some stage of foreclosure in July, further evidence that lenders are being cautious in taking action against homeowners who have fallen behind on mortgage payments. The report showed that 59,500 homes received a delinquency notice last month, down 7 percent from the previous month and 39 percent off from July 2010's total. Initial default notices have also now fallen nearly 59 percent from historically high levels seen in April 2009.
Homes scheduled for auctions also declined last month, and seizures fell 1 percent from June and 27 percent from July 2010.While a decline in foreclosures sounds like positive news, analysts caution that it is not a result of improvement in the housing market. Instead, the decline is due to lenders slowing down their foreclosure processes, and, in some cases, opting not to seize homes because they already have an abundant supply of foreclosed properties in their portfolio which they are unable to sell.
Analysts speculate that this policy of lenders only foreclosing on homes as fast as they can sell them could be the new normal practice. The trend is beneficial for homeowners struggling to keep up with payments, as it allows them to remain in their homes longer. Some homeowners are using this extra time to save money for their next step, while others are making a concerted effort to get caught up before the bank decides to foreclose.
US banks foreclosed on about 76,800 homes in July, down 34 percent from the record number seized last September. The market is now on pace for around 850,000 foreclosures this year, down from the record of more than a million set last year. Earlier in the year, RealtyTrac said, the market was on a pace for about 1.2 million repossessions, but the recent slowdown has reduced the pace considerably.
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