Home seizures in the U.S. rose 5.4 percent last month, the first annual gain in two years, as lenders seek to manage the flow of distressed properties without disrupting the housing recovery, according to RealtyTrac.
Banks repossessed 59,134 homes, up from 56,124 from November 2011, the Irvine, California-based data firm said today in a report. The increase was the first since October 2010, when foreclosures slowed after allegations that lenders were using faulty practices to take property from delinquent homeowners. Seizures climbed 11 percent from the previous month.
“Lenders have figured out how to play the foreclosure game in this new world where they’re getting a lot more scrutiny,” Daren Blomquist, RealtyTrac vice president, said in a telephone interview. “Everybody involved in the foreclosure industry has finally got a good handle on how to manage these properties to create a more managed and stable flow.”
The five largest lenders in February agreed to a $25 billion settlement of the charges and have since been pursuing foreclosure alternatives such as short sales, where a property is sold for less than the amount owed. Repossessions since March have slowed to fewer than 60,000 a month, an “acceptable” level for servicers that previously had struggled to process a flood of distressed homes, Blomquist said.
In the peak year of 2010, banks took back an average of 87,542 homes a month on the way to a record 1.05 million completed foreclosures, according to RealtyTrac.
Lenders have adapted to state measures that slowed repossessions beyond delays caused by the U.S. mortgage probe, such as a Nevada law making harder to file initial default notices, and can now better predict the overhang of distressed homes, Blomquist said. The re-election of President Barack Obama also removed some uncertainty from the housing market, he said.
“With the political environment less charged, I don’t think we’ll see another spate of laws holding lenders accountable, and there won’t be these bank-owned homes dragging down the market to the extent they have in the past,” Blomquist said.
Default, auction and repossession notices were sent to 180,817 homes in November, down 19 percent from a year earlier and 26th straight month with an annual decline, RealtyTrac said in the report. One in every 728 households received a filing.
Home seizures rose in 29 states and the District of Columbia, led by increases of 96 percent in Indiana, 88 percent in Arkansas and 87 percent in Missouri. Repossessions declined in 21 states, falling 64 percent in Nevada, 58 percent in Oregon and 49 percent in Massachusetts, RealtyTrac said.
Florida had the highest foreclosure rate, one in 304 households, up 3 percent from the previous month and 20 percent from a year earlier. Nevada followed at one in 390, and Illinois was third at one in 392, according to RealtyTrac, which sells default data from more than 2,200 counties representing 90 percent of the U.S. population.