Foreclosure Suspensions Cause Big Drop in Sales Activity
The headline foreclosure news in October was the suspension of foreclosures by a handful of lenders after certain procedures were called into question. While the announcements initially focused on 23 judicial foreclosure states outside of our coverage area, Ally (GMAC), PNC, and Bank of America all later announced that they would be suspending foreclosures nationally. The week after the announcements, we saw evidence of those suspensions on Tuesday, October 12; after the Monday holiday. Ally restarted foreclosures just a week later on October 18, but neither Bank of America nor PNC have resumed foreclosure sales as of November 15th. Foreclosure sales dropped dramatically across our coverage area as a result, though slight declines by other lenders would have likely led to a drop in October's foreclosure sales regardless. It should be noted that PropertyRadar monitors foreclosure sales at the time of the foreclosure auction, providing far more current data than other services which track Trustee's Deeds that are filed weeks later. Foreclosure filings were less impacted by the announced suspensions. Filings by Bank of America dropped slightly just after their announcement but began picking up the following week. PNC appears to have largely stopped new filings, but they typically represent less than 2 percent of filings, so their impact was minimal. Despite the limited impact of announced suspensions, Notices of Default filings were generally down. For State-by-State details, review the table below or click the State links for complete foreclosure data at the State, County, City and ZIP Code levels." Despite a short-term impact to foreclosure sales, the latest foreclosure scandal will likely lead to little more than a new scam perpetrated on those who have already lost their home," says Sean O'Toole, CEO, and Founder of PropertyRadar.com. "Much like the cottage industry of loan modification consultants that took up-front fees and provided little in return, we are now seeing consultants promising to overturn foreclosure sales, despite any experience in actually doing so."
Notice of Trustee Sale filings dropped 12.9 percent in October from September and was down 15.0 percent from the prior year. After a steady rise last year, the October inventory of Bank Owned (REO) properties was flat, which was likely helped by the 27.0 percent drop in foreclosures that went Back to the Bank. Properties Sold to a 3rd Party (typically investors), also dropped 26.5 percent in October from the prior month, as foreclosure sales were impacted by the foreclosure suspensions.
Preforeclosure inventories dropped 11.8 percent in October from the prior month, largely thanks to a 16.8 percent drop in Notice of Default filings. Foreclosure suspensions led to a 29.9 percent decline in foreclosure sales that went Back to Bank (REO) and a 26.4 percent decline in those Sold to 3rd Parties. Despite the significant decline in new Bank Owned (REO) properties, Bank Owned (REO) inventories actually rose, as REO resales continued to slow.
After a dramatic rise of 39.2 percent in September, foreclosure sales dropped 36.6 percent in October. Thus the impact of suspensions simply brought overall foreclosure sales back to typical levels. That said, the 41.5 percent drop in sales to 3rd Parties (typically investors), brought 3rd Party purchases down to their lowest level since December 2009. Foreclosure filings were also down from September to October, with Notice of Default filings down 13.5 percent and Notice of Trustee Sale filings down 24.8 percent.
Foreclosure activity was down across the board in Oregon. Notice of Default filings dropped 14.8 percent and Notice of Trustee Sale filings declined a significant 35.8 percent. Foreclosure sales were also down, with properties going Back to the Bank (REO) down 38.2 percent and those Sold to 3rd Parties down 36.5 percent. While new foreclosure activity decreased, the number of foreclosures that were in the process also decreased, with Cancellations declining 15.6 percent. This left the inventory of foreclosures Scheduled for Sale only down 4.3 percent, despite the dramatic drop in new Notices of Trustee Sale.
Washington was the least impacted by foreclosure suspensions of any state that we cover, with foreclosure sales down just 8.2 percent. Foreclosure sales that went Back to the Bank (REO) declined 10.6 percent, while those Sold to 3rd Parties partially offset that decline with an increase of 21.1 percent. Washington's Cancellations jumped 49.7 percent from September to October; this bucked the trend among other states that had declining Cancellations for months. Notice of Trustee Sale filings in Washington state increased 1.8 percent.