Home repossessions in the U.S. plunged 29 percent last month from a year earlier to the lowest level since 2007 amid increased efforts by state lawmakers and courts to delay property seizures, according to RealtyTrac.
Banks took 45,038 properties from delinquent borrowers in February, an 11 percent decrease from the previous month and the fewest since September 2007, the Irvine, California-based data provider said today in a report. Forty-one states had drops in completed foreclosures from February 2012, led by declines of 78 percent in Oregon and 69 percent in Massachusetts.
“The U.S. foreclosure inferno has been effectively contained and should be reduced to a slow burn in the next two years,” Daren Blomquist, vice president at RealtyTrac, said in the report. “But dangerous foreclosure flare-ups are still popping up in states where foreclosures have been delayed by a lengthy court process or by new legislation making it more difficult to foreclose outside of the court system.”
Refinancing programs for borrowers who owe more than their homes are worth are helping cut foreclosures as companies add workers and mortgage rates remain low. Residential values rose 6.8 percent in December from a year earlier, the biggest gain since 2006, according to the S&P/Case-Shiller home-price index. The average rate on a 30-year fixed loan was 3.52 percent as of March 7, close to the lowest level on record, according to Freddie Mac.
About 1.1 million property owners last year received new terms through the government’s Home Affordable Refinance Program, double the number in 2011 and more than the Washington- based Federal Housing Finance Agency estimated, according to a March 13 report. Borrowers in the hardest-hit states sought relief, with 68 percent of Nevada refinances and 58 percent in Florida going through HARP, the FHFA said.
Total filings have fallen for 29 straight months on an annual basis, and home seizures have dropped for 27 of the past 28 months, following a coordinated legal probe by U.S. states into faulty mortgage processing, according to RealtyTrac. A $25 billion settlement with the five largest banks was announced in February 2012.
In California, a new law that prohibits lenders from pursuing foreclosure while a borrower seeks modified loan terms, last month pushed the state down to 13th for foreclosure filings per household, the first time since 2006 California wasn’t in the top 10, RealtyTrac said.
The delaying effects of legislation in California and other states was evident in the prevalence of repossessions of homes with “well-aged, bad loans” originated from 2005 to 2007, which represent 65 percent of all mortgages in the foreclosure process nationwide, Blomquist said in an interview.
Total foreclosure filings, including default and auction notices, fell to 154,281 last month, down 25 percent from a year earlier and 2.3 percent from January, RealtyTrac said. One in 849 U.S. households got at least one filing last month.
The biggest increases included a 123 percent jump in total filings from a year earlier in Washington, which had the nation’s fifth-highest foreclosure rate at one in 656 households, and a 319 percent jump in default notices in Maryland, which had the ninth-highest rate at one in 720.
Among metropolitan areas, Baltimore filings rose 145 percent, the biggest gain, followed by Seattle, which climbed 129 percent, and New York, with a 44 percent increase, according to RealtyTrac.
“When we dig down into local markets, there’s still a foreclosure problem that needs to be dealt with,” Blomquist said.
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