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IRVINE, CA—The country saw the biggest monthly increase inforeclosure activity since March 2010 as scheduled auctions posteda 24% rise during October, according to a report from RealtyTrac. Foreclosure filingsincreased 15% from the previous month, but are still down 8% from ayear ago.

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The rise is the biggest monthly increase since US foreclosureactivity peaked in March 2010, the firm reports. Scheduledforeclosure auctions in judicial foreclosure states, whereforeclosures are processed through the court system, increased 21%from the previous month and were up 3% from a year ago. Scheduledforeclosure auctions in non-judicial states increased 27% from theprevious month and were up 14% from a year ago.

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What's behind the increase? According to DarenBlomquist, VP for RealtyTrac, “The October foreclosurenumbers are not a complete surprise given that over the past threeyears there has been an average 8% monthly uptick in scheduledforeclosure auctions in October as banks try to get ahead of theusual holiday foreclosure moratoriums. But the sheer magnitude ofthe increase this year demonstrates there is more than just aseasonal pattern at work. Distressed properties that have been in aholding pattern for years are finally being cleared for landing atthe foreclosure auction.”

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Blomquist tells GlobeSt.com it's difficult to generalize aboutwhen this trend of increased foreclosure auctions will begin toreverse itself “because these trends are very much regionallybased. In the worst states, such as New Jersey and New York, it'slikely going to take another two years before the trend reverses,whereas in states like California it will likely be six months to ayear because the backlog of delayed auctions is not as big.”

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Blomquist adds that there's still strong demand from the largeinstitutional investors at the foreclosure auction in some markets,“but even in markets with decreasing demand at the foreclosureauction, banks can be confident in selling REO properties quicklyand at a good price. That's because there is still strong demandfrom buyers, particularly in the lower price ranges, combined witha dearth of distressed homes listed for sale.”

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Institutional investors, however, are beginning to take a backseat to other homebuyers. As GlobeSt.com reported earlier this month, sales toinstitutional investors—entities that purchase atleast 10 properties in a calendar year—accounted for 4.3% of allsales of single-family homes and condos in the third quarter of theyear, representing the lowest level since the fourth quarter of2010, according to a report from RealtyTrac. The figure was downfrom 5% in the previous quarter and down from 5.3% a year ago, thefirm reported.

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Carrie Rossenfeld

Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.