US Foreclosure activity jumps in troubling sign for housing recovery

Economy Watch

 By Allison Linn

The housing market has shown some promising signs of late, but a fresh batch of foreclosure data offers a reminder that any recovery from the housing bust will likely be slow, spotty and painful.

RealtyTrac reported Thursday that foreclosure filings rose by 9 percent in May from a month earlier, to 205,990 total properties that were subject to default notices, scheduled auctions or bank repossessions.

The jump in foreclosure activity was likely because lenders are finally getting to a backlog of homes they might have started foreclosing on last year if they weren’t facing criticism for cutting corners and pushing foreclosures through too quickly and without adequate controls, said Daren Blomquist, a vice president with RealtyTrac. 

He noted that the major increases came from properties that are just starting the foreclosure process.

Still, the figures for May are down 4 percent from a year ago. In addition, the report noted, recent sales data suggests that not all homes with foreclosure filings will result in the bank taking the property.

“Based on the rise in pre-foreclosure sales we’ve seen so far this year, a higher percentage of these new foreclosure starts will likely end up as short sales or auction sales to third parties rather than bank repossessions going forward,” Brandon Moore, RealtyTrac’s CEO, said in a statement.

That’s important because bank-owned homes tend to sell for less than homes in earlier stages of foreclosure.

RealtyTrac’s data shows that a home that is in pre-foreclosure sells for 21 percent less than a non-distressed home, on average. A bank-owned home sells for 33 percent less on average.

Interactive map by state   http://www.realtytrac.com/trendcenter/ok-trend.html

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