U.S. Foreclosure Filings Fall 4% as Lenders Increase Short Sales
Foreclosure filings in the U.S. fell 4 percent in May from a year earlier as lenders disposed of more properties through short sales, where the price is less than the amount owed, according to RealtyTrac Inc.
Default, auction and repossession notices were sent to 205,990 properties, or one in every 639 households, the Irvine, California-based data firm said today in a report. The decline was the 20th straight on a year-over-year basis.
Home seizures plunged 18 percent from a year earlier even as initial notices of foreclosure increased, indicating that lenders are turning to alternatives to repossessions as they work through delinquent mortgages. Properties sold in short sales fetched $27,000 more than bank-owned homes in the first quarter, according to RealtyTrac.
“More banks are now recognizing that treating the problem of delinquent mortgages with short sales rather than bank repossessions can help them minimize their losses,” RealtyTrac Chief Executive Officer Brandon Moore said in the statement. Short sales reduce the cost to lenders to “manage, maintain and market for sale” seized homes, he said.
Total filings last month increased 9 percent from April. First-time filings totaled 109,051, up 12 percent from April and 16 percent from a year earlier and the most since October 2011, according to RealtyTrac. A “higher percentage” of foreclosure starts will probably end up as short sales as lenders realize the economic advantage, Moore said.
Georgia had the highest rate of foreclosure filings per household last month, at one in every 300, the first time since February 2006 that the state has led the nation. Filings there jumped 33 percent from April and 30 percent from May 2011.
Arizona ranked second, at one filing for every 305 households, and Nevada was third at one in 313. California ranked fourth at one in 324, followed by Illinois at one in 325 and Florida at one 340. Ohio, Michigan, South Carolina and Utah rounded out the top 10 highest rates, RealtyTrac said.
Among the 20 largest metropolitan areas, Riverside-San Bernardino in California had the highest foreclosure rate, even as filings fell 3 percent from a year earlier. Atlanta ranked second, with filings up 28 percent, and Phoenix was third, with filings down 30 percent.
Chicago had the fourth-highest foreclosure rate, with a 56 percent jump in filings. Tampa, Florida, where filings more than doubled, ranked fifth.
RealtyTrac sells default data from more than 2,200 counties representing 90 percent of the U.S. population.
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