Foreclosure Activity Down, But Starts Rise

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IRVINE, CA—Foreclosure filings decreased nationally 9% in November from the previous month, but foreclosure starts increased 6% from a year ago, the first year-over-year increase following 27 consecutive months of year-over-year decreases, according to a report from RealtyTrac. A total of 55,906 US properties started the foreclosure process in November, a decrease of 1% from the previous month.

A total of 50,102 US properties were scheduled for foreclosure auction during the month, down 16% from an 18-month high in the previous month, but up 5% from a year ago, according to the report. REO activity was down as lenders repossessed 25,249 properties in November, down 10% from the previous month and down 17% from a year ago, making November the 24^th consecutive month with year-over-year decreases.

According to Daren Blomquist, VP of RealtyTrac, “The housing market is struggling to find the new normal when it comes to a tolerable level of foreclosure activity in this post-Great Recession economy. Finding that new normal requires striking a balance between two much loan risk, which would result in another housing meltdown, and too little risk, which could result in a stunted recovery.”

Loan vintage is also an area of interest when it comes to foreclosure. “Foreclosure rates on 2014-originated loans are actually higher than 2013-originated loans nationwide and in many markets, indicating that lenders are open to a slightly higher level of risk than we've seen over the past five years of extremely tight lending standards. But it's unlikely that lenders will dial up that risk level too quickly going forward given that many are still dealing with working through a lengthy and messy foreclosure process on risky loans from the last loose lending spree.”

As GlobeSt.com reported earlier this month, RealtyTrac reported that 21% of US housing markets are less affordable than their historical averages, prompting concerns about a possible housing bubble in the works. A home price bubble is defined as a situation where prices overinflate and eventually decline.

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