RealtyTrac is reporting that lenders in the United States foreclosed upon a record number of properties this September, indicating that the real estate market is still in recovery mode.
According to the latest figures released by RealtyTrac, foreclosures increased by 3% from August, reaching 347,420. Furthermore, banks repossessed 102,134 properties during the month of September, while REO reached triple digits for the first time during a single month. Overall, REO reached a new record during the third quarter as well, during which time lenders took back 288,345 properties. These figures represent a 7% increase when compared to the previous quarter as well as a 22% increase when compared to figures from last year.
When looking at the third quarter as a whole, foreclosures were filed on 930,437 properties. While this does represent a 1% decrease when compared to last year, it is a 4% increase when compared to the previous quarter. Furthermore, 139 homes received a foreclosure filing – a category which includes default notices as well as scheduled auctions and bank repossessions – during the third quarter.
While these figures are disheartening, RealtyTrac does report that fewer borrowers are defaulting as lenders work through the seriously delinquent loans. In fact, there were on 269,657 default notices in the third quarter, a figure that represents a decline of 22% when compared to the 2009 third quarter peak.
“Lenders foreclosed on a record number of properties in September and in the third quarter, taking a bit out of the backlog of distressed properties where the foreclosure process was delayed by foreclosure prevention efforts over the last 20 months,” said James Saccacio, who is the chief executive of RealtyTrac.
Saccacio went on to say that he expects REO figures to fall during the fourth quarter, at which time many lenders should be working through recent foreclosures.
“If the lenders can resolve the documentation issue quickly, then we would expect the temporary lull in foreclosure activity to be followed by a parallel spike in activity as many of the delayed foreclosures move forward in the foreclosure process,” said Saccacio.
Still, if lenders are unable to quickly solve the problem, the number of distressed properties will continue to grow and home prices will continue to experience problems. Due to all of the continued uncertainty, many economists are exploring how the lackluster property market will affect the recovery of the economy. Radar Logic analysts, for example, are skeptical about the market improving, as they feel the foreclosure delay could have a long-term positive effect on the housing market if sales are the foreclosed upon homes are put off until the economy becomes healthier and when the housing market is better capable of absorbing the new inventory. At the same time, delaying foreclosures could just push the problem further into the future, with only short-term relief provided without any benefit to the national economy.