Saturday, July 21, 2012
Foreclosures may be back on the upswing - cont.
In the first half of this year, Nevada posted the highest foreclosure rate of any state, with 20,618 houses or one in 57 homes reporting a filing. This came despite a 61% decrease from the same period a year earlier. Foreclosure starts also surged 61% from the first quarter to the second quarter, after lenders adjusted to a state law that took effect in October that requires homeowners to have access to any documents used in the foreclosure process.
Arizona had the second-highest foreclosure rate. Its 49,157 properties with at least one foreclosure filing in the six-month period represented one in every 58 homes. That was a decrease of 37% from the same period in 2011 and a 6% drop from the previous six months. Still, foreclosure starts were on the rise in the second quarter, increasing 11% from the first quarter.
Georgia had the third-highest foreclosure rate in the first half, boosted by a 23% increase in foreclosure starts from the same period in 2011 and a 5% uptick between the first and second quarters of this year. In the first six months of this year, 65,342 Georgia properties had at least one foreclosure filing, a rate of one in every 60 homes.
California posted the fourth-highest foreclosure rate in the first half with 213,988 properties or one in every 64 reporting a filing. An 18% year-over-year uptick in foreclosure starts in the Golden State in June, however, boosted its foreclosure rate for the month to the highest level nationwide — one in every 288 homes. This is the first time this has happened since RealtyTrac began issuing its report in January 2005.
Regulators and lawmakers across the country will watch California's foreclosure situation. A new bill that Gov. Jerry Brown signed into law Wednesday, which takes effect in January, has written much of the mortgage settlement with the five major lenders into law and expands it to encompass all lenders.
It is the first state legislation to force banks to end the practice of "dual tracking," or proceeding with the foreclosure process while homeowners are negotiating a modification with their lender. It also requires a single point of contact for homeowners regarding their delinquent home loan. If the lender violates the law, a homeowner can sue.
It could be used as a model for foreclosure reform in other states and is likely to increase the number of short sales and modifications. In an effort to avoid the possibility of such a lawsuit, the lender will be less inclined to repossess the property.