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RealtyTrac: Calif. foreclosure activity falls 25% in 2012 from 2011

Foreclosure activity decreased in California 25 percent in 2012 from 2011, one of 25 statewide decreases in the country, according to RealtyTrac’s Year-End 2012 U.S. Foreclosure Market Report.

Foreclosure filings – default notices, scheduled bank auctions and bank repossessions – were filed on 319,162 California properties in 2012. One in every 43 housing units, or 2.33 percent, had at least one foreclosure filing during the year.

California was among 25 states that saw foreclosure activity in 2012 decrease from 2011. Nineteen of those states primarily use the more streamlined non-judicial foreclosure process — including Nevada (57 percent decrease), Utah (40 percent decrease), Oregon (40 percent decrease), Arizona (33 percent decrease), California (25 percent decrease) and Michigan (23 percent decrease).

California was also among the 10 states with the highest foreclosure rates, with Florida, Nevada and Arizona posting the top three.

Despite a 25 percent decrease in foreclosure activity from 2011, Stockton, Calif., posted the nation’s highest foreclosure rate in 2012 among metropolitan statistical areas with a population of 200,000 or more: 3.98 percent of housing units (one in 25) with a foreclosure filing during the year.

Six other California cities ranked in the top 20 highest metro foreclosure rates for the year, including Riverside-San Bernardino-Ontario at No. 2 (3.86 percent of housing units with a foreclosure filing), Modesto at No. 3 (3.82 percent), and Vallejo-Fairfield at No. 4 (3.73 percent). All seven California metro areas in the top 20 posted decreasing foreclosure activity from 2011.

Nationwide, a total of 2,304,941 foreclosure filings were reported on 1,836,634 U.S. properties in 2012, down 3 percent from 2011 and down 36 percent from the peak of 2.9 million properties with foreclosure filings in 2010.

The report also shows that 1.39 percent of U.S. housing units (one in every 72) had at least one foreclosure filing during the year, down from 1.45 percent of housing units in 2011 and down from 2.23 percent of housing units in 2010.

Florida posted the nation’s highest state foreclosure rate in 2012, with 3.11 percent of housing units (one in 32) receiving a foreclosure filing during the year. Other states with top 5 foreclosure rates were Nevada (2.70 percent), Arizona (2.69 percent), Georgia (2.58 percent) and Illinois (2.58 percent).

December foreclosure activity dropped 10 percent from the previous month to the lowest level since April 2007, a 68-month low, and fourth quarter foreclosure activity was at the lowest quarterly level since the third quarter of 2007 despite a 9 percent quarterly increase in bank repossessions.

The average time to complete a foreclosure nationwide in the fourth quarter increased 8 percent from the previous quarter to a record-high 414 days.

Lower foreclosure inventory gave sellers the upper hand and helped median sales prices in the first 10 months of 2012 to increase from the same time period in 2011 in 25 states. Median sales prices nationwide during the first 10 months of 2012 on average were 99 percent of median list prices.

In January 2013, 10.9 million homeowners nationwide — representing 26 percent of all outstanding homes with a mortgage — were seriously underwater, meaning they owed at least 25 percent more on their home than what it was worth. That was down from 12.5 million homeowners representing 28 percent of all homes with a mortgage a year earlier in January 2012.

“We expect to see continued increases in judicial foreclosure states near the beginning of the year as lenders finish catching up with the backlogs in those states, and another set of increases in some non-judicial states near the end of the year as lenders adjust to the new laws and process some deferred foreclosures in those states,” said Daren Blomquist, vice president at RealtyTrac.

In December, foreclosure filings were reported on 29,925 California properties, a 5.88 percent decrease from November and a 43.33 percent decrease from December 2011. Foreclosure filings were reported on 90,158 properties in the fourth quarter, down 17.57 percent from the third quarter and down 40.87 percent from the fourth quarter of 2011.

Nationwide, foreclosure filings were reported on 162,511 U.S. properties in December, a 10 percent decrease from the previous month and down 21 percent from December 2011. December’s total was the lowest monthly total since April 2007 — a 68-month low. All three types of foreclosure filings — default notices (NOD, LIS), scheduled foreclosure auctions (NTS, NFS) and bank repossessions (REO) decreased both on a monthly and annual basis in December.

Foreclosure filings were reported on 503,462 U.S. properties during the fourth quarter, a 5 percent decrease from the previous quarter — despite a 9 percent quarter-over-quarter increase in bank repossessions — and a 14 percent decrease from the fourth quarter of 2011. The fourth quarter total was the lowest quarterly total since the third quarter of 2007, when 448,145 U.S. properties received foreclosure filings.

As of the end of the year, more than 1.5 million homes were in some stage of foreclosure or bank-owned, up 9 percent from the end of 2011, but still 31 percent below the peak of 2.2 million at the end of 2010. Foreclosure inventory had dropped to a 57-month low of 1.3 million in May 2012, but has since risen off that low.

Florida accounted for the biggest share of foreclosure inventory of any state with 305,766 properties in some stage of foreclosure or bank owned (20 percent of the national total), followed by California with 212,172 (14 percent), Illinois with 135,858 (9 percent), Ohio with 76,015 (5 percent), and New York with 69,044 (5 percent).

Lenders with the most inventory of bank-owned (REO) properties were the government-backed entities of Fannie Mae, Freddie Mac and the U.S. Department of Housing and Urban Development (HUD) with a combined 26 percent of all REO inventory, followed by Bank of America with 8 percent, Wells Fargo with 6 percent, US BankCorp with 4 percent and Chase with 4 percent.

Of the properties in some stage of foreclosure or bank owned at the end of 2012, an estimated 37 percent had a market value between $100,000 and $200,000, while an estimated 27 percent had a market value between $50,000 and $100,000, and an estimated 15 percent had a market value between $200,000 and $300,000.

Lower foreclosure inventory during the year may have helped home prices to hit bottom and start rising in many markets during the year. Median home prices during the first 10 months of 2012 rose compared to the same time period in 2011 in 25 states and in 16 of the nation’s 20 largest metro areas.

Nationwide the average monthly median home price during the first 10 months of 2012 was $164,712 — nearly identical to the average monthly median home price of $164,960 during the same time period in 2011. The average monthly list price during the first 12 months of 2012 was $166,110, showing that sellers on average were getting 99 percent of their asking price during the year.

“The influx of foreclosure activity in 2012 in many local markets should translate into more foreclosure inventory available for sale in 2013 in those markets,” Blomquist noted. “That is good news for buyers and investors, but could result in some short-term weakness in home prices as the often-discounted foreclosure sales weigh down overall home values.”

Rising home prices helped boost home values in 2012, thereby lifting many homeowners across the country out of negative equity compared to a year ago. About 10.9 million homeowners nationwide — representing 26 percent of all homeowners with a mortgage — owed at least 25 percent more on their combined mortgages than what their homes were worth as of January 2013, down from 12.5 million seriously underwater homeowners representing 28 percent of all homeowners with a mortgage in January 2012.

U.S. properties foreclosed in the fourth quarter took an average of 414 days to complete the foreclosure process, up from 382 days in the third quarter and up from 348 days in the fourth quarter of 2011. It was the longest time to complete the foreclosure process since RealtyTrac began tracking the metric in the first quarter of 2007.

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