The number of foreclosure notices filed in February decreased a whopping 27 percent compared with a year earlier, which is the largest drop on record, according to RealtyTrac. The same report found that notices dropped 14 percent month over month. While these numbers are impressive, many say the decreases are not a sign of housing improvement and are instead side effects of the robo-signing issues of last year.
Foreclosures Filings Dropped But Were Still High
In the month of February, there were more than 225,000 filings, which equaled one in every 577 homes. The number of bank repossessed homes reached 64,643 in the same month, which is a considerable drop from its 102,000 peak last September.
However, just because numbers are down doesn’t mean they aren’t still too high, especially in hard-hit states.
For instance, in Nevada, servicers filed foreclosure notices on one out of every 119 mortgage loans. In Arizona, one in 222 homes had notices filed against them and in California, one in 239 homes received foreclosure filings.
Home sales are still low, which means filings that turn into repossessions are hitting a market where houses are not selling. In other words, the market is still depressed, no matter how good one set of stats look.
Bad Mortgages and Harsh Weather Contributed to Drop in Foreclosures
In the RealtyTrac report, it was noted that one reason foreclosures slowed in the month of February was the harsh weather across much of the country. Many mortgage servicing offices were closed, delaying paperwork processing as well as the serving of notices of default, auction sales and other filings.
But a bigger contributor is considered to be the robo-signing mess that resulted in a foreclosure freeze last year. As told by RealtyTrac CEO James Saccacio, “Allegations of improper foreclosure processing continued to dog the mortgage servicing industry and disrupt court dockets,” he told CNN Money.
Unless the mortgage servicing industry is able to make sense of the robo-signing scandal by reversing the foreclosures in the coming months, the stalled foreclosure proceedings could resume before the year is out, skyrocketing the number seen in February.
