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Sharp Drop in DC Foreclosures is Temporary Good News

by Mark Wellborn

Sharp Drop in DC Foreclosures is Temporary Good News: Figure 1

Foreclosure listing firm RealtyTrac reported recently that the number of homes repossessed by banks in the first quarter of 2011 was down 6 percent from the last quarter in 2010 and down 17 percent year-over-year. In the DC area, the drop was even more significant — there were 6,619 properties with foreclosure filings in the first quarter of 2011, down just over 50 percent from the first quarter of 2010.

While this seems like optimistic news, the first-quarter drop was due in large part to lender processing delays. From the Associated Press:

The drop-off in foreclosure activity stems from foreclosure documentation problems that came to light last fall. Many banks have since revisited thousands of foreclosure cases, delaying the processing of new foreclosures. The logjam has been compounded by court delays in states such as Florida, New York, and New Jersey, where foreclosures must be approved by a judge.

In a press release, James J. Saccacio, chief executive officer of RealtyTrac, said that the housing market “is still facing the dual threat of a looming shadow inventory of distressed properties and the probability that foreclosure activity will begin to increase again as lenders and servicers gradually work their way through the backlog of thousands of foreclosures that have been delayed due to improperly processed paperwork.”

There were 63 foreclosure filings in DC proper last quarter, down about 88 percent from a year ago. In Maryland, filings fell 68 percent, and in Virginia, there was a 29 percent drop.

See other articles related to: realty trac

This article originally published at http://dc.urbanturf.com/articles/blog/sharp_drop_in_dc_foreclosures_is_temporary_good_news/3326

4 Comments

  1. Colin Storm said at 3:24 pm on Thursday April 14, 2011:
    It seems that delays in the processing of foreclosures will continue based on the news today that regulators have given banks addition instruction to clean things up. (http://online.wsj.com/article/SB10001424052748703551304576260952761726790.html?mod=WSJ_business_whatsNews) It will take time to implement these changes, and there are additional ramifications coming down the line for banks, who will likely be hesitant to process too many new foreclosures in fear that the processes will be deemed unacceptable later. In the DC area that is mostly good news for struggling home owners as prices continue to tick steadily upward. Plenty of owners are beyond the pail, but there are many who are straddling the line between stability and falling underwater.
  1. Calling John Galt said at 8:56 pm on Thursday April 14, 2011:
    Ever experience the flip side of a bottle neck? Hang on tight boys and girls, the regulators are about to put us through the spin cycle all over again. I shutter to think about what it will look like when the flood gates open up again and that 88% mentioned above will hit the market (and it will) along with the rest of what is still to come. What the regulators don't understand is that you can only evade reality for so long before you have to pay the price in spades (think current news topic Federal Deficit).
  1. Steve Sushner said at 7:33 am on Saturday April 16, 2011:
    It could also be that there was a moratorium on foreclosures in DC for owner occupied residential properties for the entire first quarter.
  1. Seth said at 5:10 pm on Tuesday April 19, 2011:
    What Steve said. The only reason for these numbers is that DC passed laws requiring mediation prior to foreclosure; however there are no regulations in place to set the law into motion and foreclosures are frozen until that time. Artificially stopping foreclosures is going to lead to a huge glut of them all at once and is going to be a mess.

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