CoreLogic Report Shows Sharp Drop in Foreclosures for 2011
New data released today suggests that the foreclosure crisis may be subsiding, though experts caution against taking the data at face value since government activity has distorted the housing market in the past year. Analytics firm CoreLogic says that the number of completed foreclosures dropped by 24 percent between 2010 and 2011, while the supply of homes in some state of foreclosure also fell by a considerable margin.
Completed foreclosures numbered about 830,000 in 2011 -- representing a significant decrease from the approximately 1.1 million foreclosures completed in 2010 -- while the number of homes in some stage of foreclosure dropped by 8.4 percent to 1.4 million, the report says. Since December of 2008, 3.2 million homes have succumbed to foreclosure, according to CoreLogic.
Though at first glance the report would seem to suggest that the foreclosure crisis is abating, experts say much of the decrease is a result of government interference in the housing market. Foreclosures "are being curtailed by a variety of judicial and regulatory constraints," CoreLogic chief economist Mark Fleming said in a statement. Experts like Fleming say investigations and regulatory measures stemming from alleged foreclosure improprieties have caused banks to halt foreclosure proceedings, creating a backlog.
Overshadowing all other government action is a possible settlement over foreclosure abuses being negotiated between the nation's five largest mortgage servicers and a coalition of state attorneys general that has been long in the works. Earlier this week, Iowa State Attorney General Thomas Miller announced that more than 40 states had signed on to the deal before a Monday deadline. But it remains to be seen if key states like New York and California will agree to the deal.
Against the backdrop of ramped-up government oversight, banks have just recently begun to sell foreclosed homes at a faster pace than they acquire them. In December, the "distressed clearing ratio," calculated by dividing the number of foreclosed homes banks sell by the number of homes they push through foreclosure, ticked up to 1.03 from 0.94 in November, according to the CoreLogic report.
"This is the first time in a year that REO sales have outpaced completed foreclosures, and part of the reason for the decrease in the foreclosure inventory," Fleming said.
A report recently released by RealtyTrac, a company that compiles foreclosure data, also showed a slowdown in foreclosure activity. Foreclosure sales as a share of total home sales dropped by 10 percent last year, falling from 30 percent in the third quarter of 2010 to 20 percent in the third quarter of 2011. The drop also reflects government activity in the housing market, experts say.
"As the foreclosure industry gets clarity on the foreclosure process, they will be able to push more of these foreclosures to sale," Daren Blomquist, vice president of RealtyTrac, told The Associated Press last month.
