Foreclosure Filings Drop, But Recovery Still a Flop

The vast numbers of foreclosures that have flooded the market since the recession took hold have finally started to subside – but a full-blown recovery may still be far in the distant future.

Foreclosure filings in the first quarter have dropped below early 2008 levels, according to a report released Thursday by housing analytics company RealtyTrac. The filings, which include default notices, scheduled auctions and bank repossessions, reflect 681,153 properties, down 14.8 percent from the previous quarter and 26.9 percent from the beginning of 2010. In real terms, one in every 191 residential properties received a foreclosure filing during the quarter.

But the slowdown in foreclosure filings doesn't necessarily mean the market is on the rebound. In fact, a driving factor behind the decrease in foreclosures is the ongoing federal investigation of the nation's largest lenders in connection with faulty foreclosure paperwork.