Foreclosure and distressed sales fell to 20 percent of U.S. home purchases in the third quarter of last year as legal scrutiny of property seizures reduced the number of deals, according to RealtyTrac Inc.
Transactions involving bank-owned property and short sales, where lenders accept less than the amount owed, were down from 22 percent of total home purchases in the second quarter and 30 percent a year earlier, the Irvine, California-based data seller said today in a statement.
“The sooner the market gets more clarity about accepted foreclosure procedures, primarily through the long-promised settlement between multiple states attorneys general and major lenders, the sooner the market can more efficiently dispose of these distressed properties,” RealtyTrac Chief Executive Officer Brandon Moore said in the statement.
Foreclosure sales and first-time default notices have declined since banks and servicers were accused more than a year ago of using flawed documentation to repossess homes. A proposed settlement with lenders including Bank of America Corp., JPMorgan Chase & Co., Citigroup Inc., Wells Fargo & Co. and Ally Financial Inc. is getting closer to resolving the complaints, Iowa Attorney General Tom Miller said Jan. 24.
Properties in the foreclosure process or already seized by lenders sold for an average $165,322 in the third quarter, up 1 percent from the second quarter and down 3 percent from a year earlier, RealtyTrac said. The price represents an average discount of 34 percent compared with a non-foreclosure property, unchanged from the second quarter and down from a 37 percent difference a year earlier, the company said.
Repossessions to Increase
As lenders resume foreclosures, home repossessions are likely to rise about 25 percent this year from the more than 804,000 properties seized in 2011, Daren Blomquist, a RealtyTrac spokesman, said in an interview earlier this month. Banks had already begun to accelerate default and repossession proceedings in the second half of 2011, according to Moore.
A total of 221,536 homes that sold in the third quarter were in some stage of foreclosure, meaning they had received notices of default, auction or repossession, RealtyTrac said. That was down 11 percent from a revised second quarter total and 5 percent from a year earlier. Bank-owned homes made up 128,712 of those sales, and pre-foreclosure transactions, including short sales, accounted for 92,824.
Pre-foreclosure deals increased 68 percent from a year earlier in Michigan, 44 percent in North Carolina, 43 percent in Ohio and 35 percent in Georgia. Such transactions outnumbered bank-owned sales in Colorado, Florida, New Jersey and New York, according to RealtyTrac.
Biggest in Nevada
Nevada had the biggest share of foreclosure-related sales of any state, at almost 57 percent of total home purchases in the third quarter. The 13,992 bank-owned and pre-foreclosure sales represented a 24 percent increase from a year earlier, RealtyTrac said.
The share of foreclosure sales in California was 44 percent, with the state’s 62,583 transactions up 7 percent from the third quarter of 2010. The proportion in Arizona was 43 percent, with 21,619 such purchases up 19 percent.
In Florida, where courts oversee property seizures by lenders, foreclosure sales plunged to 19 percent of all deals from 39 percent in the third quarter of 2010.
Foreclosure-related transactions as a share of total sales were 34 percent in Georgia, 26 percent in Colorado and 23 percent in Michigan.
RealtyTrac sells default data from more than 2,200 counties representing 90 percent of the U.S. population. Compilation of property-title transfers delays reporting of foreclosure sales data by a quarter.