Foreclosures Fall as Banks Streamline Process

Foreclosures dropped again in May -- the second month in a row that the number of foreclosure actions fell, according to research company RealtyTrac.

The news will make for some positive headlines -- but we've seen fluctuations like this before. The rate of foreclosure is still absurdly high.

The genuine good news is buried a little deeper in the RealtyTrac report. Banks are cutting far into the backlog of properties in the foreclosure process, while fewer new properties are getting into trouble as the job market begins to stabilize.

"Lenders appear to be ramping up the pace of completing those forestalled foreclosures even while the inflow of delinquencies into the foreclosure process has slowed," said James J. Saccacio, chief executive officer of RealtyTrac. "Overall foreclosure activity [is] leveling off while lenders work through the backlog of distressed properties that have built up over the past 20 months."

The question is whether this lull is an early sign of upward momentum in the housing market or rather a quick torpor before another round of recessionary catastrophe.