Foreclosure Actions at Lowest Level Since 2007

foreclosure ratesAfter a year marred by red tape and mortgage lender malfeasance, foreclosure activity in 2011 fell to the lowest annual rate since the housing crisis began more than four years ago, according to data released Thursday.

Foreclosure filings -- which include default notices, scheduled auctions and bank repossessions -- were recorded on 1.9 million homes in 2011, down 34 percent from 2010, the foreclosure database company, RealtyTrac, said.

In real terms, 1.45 percent of homes, or one in 69, were in some stage of foreclosure in 2011. That's down from 2.23 percent in 2010, 2.21 percent in 2009, and 1.8 percent in 2008. Both key metrics in 2011 were at their lowest rate since 2007, when home prices started to tank in several markets.

But the latest figures are less a sign of recovery than a reflection of widespread delays in foreclosure processing.

"It's not that the market is all of a sudden staging a dramatic recovery," said RealtyTrac spokesperson Daren Blomquist in an interview with AOL Real Estate. "It's just that lenders are taking their time for a variety of reasons."

Principal among those reasons is the ongoing (and seemingly never-ending) negotiations for a nationwide mortgage settlement between the country's biggest banks and a coalition of state attorneys general.

A proposed $25 billion lawsuit aims to take lenders to task for a number of fraudulent foreclosure proceedings collectively referred to as "robo-signing" during the height of the housing bubble. As the investigation lurches forward, local courts have been inundated with claims of wrongful foreclosure, especially in states like Florida, where judicial action is necessary to repossess homes with delinquent mortgages.

(See a full list of judicial foreclosure states here.)

Not surprisingly, Florida is "ground zero for dysfunctional foreclosure processes," Blomquist said. While there has been almost a 63 percent decrease in foreclosure activity over the last year in the hard-hit state, he said that the time it takes to complete the process has gone up 48 percent in the same time period. From start to finish, he said, foreclosures take an average of 806 days in the Sunshine State -- the national average is 348.

Closer to 'Reality' in Arizona

But while the widespread legal delays may mask the underlying problems facing the housing market, Blomquist said that foreclosures would have fallen in 2011 regardless -- just not so dramatically.

For a sense of what the road to recovery really looks like, Blomquist offered Arizona, another state suffering from high foreclosure rates, albeit under different circumstances than Florida.

Foreclosures are down there, too, but as a non-judicial state, Arizona has been far more expedient in getting distressed properties on the market and out of the courts. The average foreclosure process in Arizona takes 173 days, far below the national average of 348.

The problem across the board, though, is that once foreclosures hit the market their effect on neighboring properties can be severe. Foreclosures typically sell at a 20 percent discount, according to the National Association of Realtors, and that can drag comparable homes' value down fast.

Facing Facts

December marked a 49-month low for monthly foreclosure activity nationwide. The state with the longest foreclosure processing time by far is New York, with an average of 1,019 days to completion in the fourth quarter. New Jersey and Florida rounded out the top three with 964 days and 806 days, respectively.

But as counterintuitive as it may sound, Blomquist said, the recovery won't truly take off until more foreclosures are processed and the backlog of distressed properties is brought back to normal inventory levels.

'We've been deferring a lot of these foreclosures," he said. "So at some point the market needs to face reality and deal with them."

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Foreclosure Actions at Lowest Level Since 2007

After bidding farewell to 2011, Realtors, investors and regulators the world over are no doubt wondering: Will 2012 be the year the real estate market finally rides out the aftershocks of the housing bust and mounts a full-on recovery?

There are indications that it could be. Big-time investors say that they're bullish on real estate and recent figures showing that pending home sales are at an 18-month high lend credence that view.

But even if home prices don't trend up nationwide, certain markets seem almost guaranteed to do well. Looking at a variety of sources, AOL Real Estate brings you 10 of this year's most promising housing markets for 2012. 

Location: Pittsburgh
Price: $299,900
Beds/Baths: 3/2
Sq. Ft.: N/A

MSN Real Estate lists Pittsburgh as one of the best housing markets in the U.S., pointing out that the steel town suffered practically no price decline following the housing bust and that its prices are projected to begin gaining ground relatively soon. 

This brick colonial typifies the sort of deal that you can expect to find on the higher end of Pittsburgh's market.  

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Like many Northeastern homes, its interior has a bit of an Old World feel

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Location: Worcester, Mass. 
Price: $300,000
Beds/Baths: 4/3
Sq Ft: 2,730

Tech companies are driving job growth in Worcester, according to MSN Real Estate. That may help real estate prices, which slipped 3 percent this past year, but are expected to tick up 2 percent in 2013. 

Spanning a generous 2,730 square feet, this alternatively colored home was built in 1987 and is equipped with its very own "game room," according to the listing. 

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The home features hardwood floors and a well-equipped kitchen, with ample cabinetry. There's also a sliding glass door that leads to a porch overlooking the back yard.

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Location: Kansas City, Kan. 
Price: $199,000
Beds/Baths: 4/3
Sq. Ft.: 2,123

Realtor magazine ranks Kansas City, Kan., as the most promising housing market of 2012. HousingPredictor, which the magazine used for its rankings, estimates that the Midwestern city will see its real estate prices appreciate by 5.8 percent in 2012. 

Priced at $94 a square foot, this four-bedroom delivers everything you need.

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Pictured here is the home's generously sized kitchen. 

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Location: Topeka, Kan. 
Price: $429,000
Beds/Baths: 5/5
Sq. Ft.: 4,782

Kansas seems to have fared better than most through the real estate storm. Another one of the state's major cities, Topeka is predicted to post the second-highest increase in real estate prices, according to Realtor magazine.

Here is a sprawling home in Topeka, one of the ritzier houses in town. The $429,000 home offers five bedrooms and 4,782 total square feet. 

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The home comes with a large living space bathed in sunlight through its giant windows. 

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Location: El Paso, Texas
Price: $525,000
Beds/Baths: 5/4
Sq. Ft.: 3,767

El Paso is one of a host of Texas real estate markets that have fared well during the housing crisis. HousingPredictor projects a 3.2 percent increase in home prices this year. 

This groovy, fortress-like new traditional is priced at $525,000.

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The interior has a slick modern feel. Texas chic, if you will. 

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Location: Huntington, W.Va.
Price: $175,000
Beds/Baths: 4/3
Sq. Ft.: 1,804

On the hunt for new digs in a market that's turned the corner of the housing slump? Look no further than Huntington, W.Va. HousingPredictor expects the town's real estate prices to climb by 4 percent this year. 

Throw down $175,000 for this handsome 1/3-acre property, and enjoy a thoughtful interior as well as verdant surroundings. 

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Sink your teeth into this kitchen.

Want tips on how to master real estate photography? Read some tips from a pro

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Location: Charleston, W.Va. 
Price: $349,000
Beds/Baths: 4/3
Sq. Ft.: 3,716

Charleston clocks in at third on Realtor magazine's rankings of this year's most promising real estate markets. HousingPredictor expects a 4.5 percent increase. 

Search this town and you may find yourself mulling a neat property like this 3,716-square-foot four-bedroom. 

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The home offers elegant decor with dark hardwood floors and arched doorways. 

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Location: Bismarck, N.D. 
Price: $493,500
Beds/Baths: 3/6
Sq. Ft.: 3,089

Bismarck, N.D., is also expected to perform well in the real estate market this year. HousingPredictor estimates a 3.6 percent increase in home prices there.

This home's exterior reminds us that along with some serious deals there's a tradeoff: You're going to have to cope with some very harsh winters. 

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Don't expect to have to walk very far for a restroom in this home: Its bathroom-to-bedroom ratio is 2 to 1. 

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Location: University Place, Wash. 
Price: $439,090
Beds/Baths: 3/2
Sq. Ft.: 2,058

A tip of the hat to DailyFinance for directing us to Tacoma, Wash., a city whose real estate prices are set to skyrocket, according to a Fiserv prediction. The financial services information provider projects that prices in Tacoma will jump a staggering 24.9 percent. 

Located in University Place, a suburb just outside of Tacoma, this listing offers a taste of the sort of homes that may benefit from the price boom. 

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Constructed just a year ago, the home is practically brand new. Pictured here is the house's chicly lit kitchen. 

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Location: Memphis, Tenn. 
Price: $635,000
Beds/Baths: 5/6
Sq. Ft.: N/A

Fistserv also ranks Memphis, Tenn., as one of the most promising real estate markets of the year, predicting that the city's real estate prices will appreciate by 10 percent. 

This pricey home will bring you an acre of lush land, plus a down country five-bedroom that dates back to the 1950s. 

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The contemporary delivers a pool, some woodland and a colorful interior. 

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