U.S. Foreclosures at a Five-Year Low

A new RealtyTrac report says foreclosure filings on U.S. homes in September fell to their lowest level in five years, though foreclosures continued to rise in some states. The decrease as driven largely by fewer nonjudicial foreclosure states such as California, Georgia, Texas, Arizona and Michigan.

The online marketplace for foreclosure properties said in its U.S. Foreclosure Market Report for September and the third quarter that the overall number of reported default notices, scheduled auctions and bank repossessions came to 180,427. That was 7% less than August's foreclosure rate, down 16% from September of 2011 and the lowest total since July 2007.

Due to the decrease in September, third-quarter foreclosure numbers dropped to their lowest level since the fourth quarter of 2007. Foreclosure filings were reported on 531,576 U.S. properties during the quarter, which was 5% less than in the second quarter and a decline of 13% from the same period a year ago.

Daren Blomquist, vice president of RealtyTrac, said:

The five-year low, combined with the fact that the year-over-year decrease in foreclosures was in its twenty-fourth straight month, is evidence that we're past the worst of foreclosure crisis.

Just four states with nonjudicial foreclosure rules registered an increase in activity in the third quarter. Washington state saw a 70% increase from the previous quarter, which was up 15% from the third quarter of 2011.

Many judicial foreclosure states, including Illinois, Ohio, New Jersey and New York, continued to buck the national trend, registering year-over-year increases in foreclosure activity in both September and the third quarter. Florida, a judicial state, ranked highest in the nation in September and the third quarter for the first time since 2005. One in 117 Florida housing units had a foreclosure filing in the third quarter, compared to the national average of one in 248 housing units.

One in every 125 Arizona housing units had a foreclosure filing during the third quarter, the nation's second highest state foreclosure rate. California also posted a foreclosure rate of one in every 125 housing units with a foreclosure filing in the third quarter. Other states with foreclosure rates ranking among the top 10 in the third quarter were Illinois, Georgia, Nevada, Ohio, Michigan, South Carolina and Colorado.

Blomquist said:

[S]everal states where the foreclosure flow was not so dammed up last year could see a roller-coaster pattern in foreclosure activity going forward because of recent legislation or court rulings that substantively change the rules to properly foreclose. A backlog of delayed foreclosures will likely build up in those states as lenders adjust to the new rules, with many of those delayed foreclosures eventually hitting down the road.