Pilot & Today staff and The Associated Press

10-14-2011

The number of Routt County homes entering the foreclosure process jumped 39 percent in the third quarter.
According to figures maintained by Routt County Treasurer Jeanne Haddon’s office, 86 properties began the foreclosure process in the quarter that stretches from July to September.
The second quarter saw 62 local properties enter the foreclosure process. That was down from 104 in the first quarter of 2011.
The third quarter uptick here was similar to a trend in foreclosure starts across the nation. The Associated Press reports that the number of U.S. homes that received a first-time default notice during the July to September quarter increased 14 percent compared to the second quarter.
That increase signals banks more aggressively are moving against borrowers who have fallen behind on their mortgage payments than they have since industrywide foreclosure processing problems emerged last fall. Those problems resulted in a sharp drop in foreclosure activity this year.
The surge in default notices means homeowners who haven’t kept up their mortgage payments now could end up on the foreclosure path sooner rather than later. Initial default notices are the first step in the process that eventually can lead to a home being taken back by a lender.
A pickup in foreclosure activity also means a potentially faster turnaround for the U.S. housing market. Experts say a revival isn’t likely to occur as long as there remains a glut of potential foreclosures hovering over the market.
The third-quarter increase in initial defaults largely was a product of a spike in August. In September, default notices were off 10 percent from August, RealtyTrac said.
Still, the nationwide jump in initial defaults during the July to September period is significant because it is the first increase after five consecutive quarterly declines, suggesting banks gradually are addressing their backlog of homes in foreclosure and are beginning to move on more recent home loan defaults, RealtyTrac CEO James Saccacio said.
The Routt County real estate market has not seen multiple quarterly declines in foreclosure starts since the recession began. In fact, the second quarter of 2011 was the first quarterly decline in foreclosure starts since the second quarter of 2009.
“While foreclosure activity in September and the third quarter continued to register well below levels from a year ago, there is evidence that this temporary downward trend is about to change direction, with foreclosure activity slowly beginning to ramp back up,” Saccacio said.
Foreclosure activity began to slow last fall after problems surfaced with the way many lenders were handling foreclosure paperwork, namely shoddy mortgage paperwork comprising several shortcuts known collectively as robo-signing.
Many of the nation’s largest banks reacted by temporarily ceasing all foreclosures, re-filing previously filed foreclosure cases and revisiting pending cases to prevent errors.
Other factors also have worked to stall the pace of new foreclosures this year. The process has been held up by court delays in states where judges play a role in the foreclosure process, lenders’ reluctance to take back properties amid slowing home sales and a possible settlement of government probes into the industry’s mortgage-lending practices.
While banks appear more willing to start the foreclosure countdown on borrowers, they haven’t put a dent in the overall length of the foreclosure process.
In the third quarter, it took an average of 336 days, or 11.2 months, for a U.S. home to go from receiving an initial notice of default to being foreclosed by a lender, RealtyTrac said.
That’s up from 318 days, or 10.6 months, in the second quarter and represents the largest average span of time for the foreclosure process since the first quarter of 2007, the firm said.
In all, 195,878 properties received a default notice in the third quarter. Despite the sharp increase from the second quarter, the total still was down 27 percent versus the third quarter last year, RealtyTrac said.
Lenders took back 196,530 homes during the quarter, down 4 percent from the second quarter and down 32 percent from the same quarter last year.
Banks remain on track to repossess some 800,000 homes this year, down from more than 1 million last year, Saccacio said.