Backlog Spurs 34% Decline in Foreclosure Filings for 2011

A total of 2,698,967 foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 1,887,777 U.S. properties in 2011, a decrease of 34 percent in total properties from 2010, according to RealtyTrac’s annual report.
But the decline was mostly the result of a growing backlog of foreclosure actions that were delayed as servicers reviewed questionable paperwork – fallout from the “robo-signing” scandal.
Many state authorities continue to investigate the allegedly sloppy paperwork, in many cases signed affidavits by lender personnel that contained false or missing borrower information. State attorneys general are seeking a settlement with the lenders in the case.
At least one – Massachusetts Attorney General Martha Coakley – opted to file suit last month against five of the nation’s largest lenders – Bank of America, Wells Fargo, JP Morgan Chase, Citi, and Ally Financial’s GMAC Mortgage unit – charging that banks practiced deceptive loan servicing and pursued illegal foreclosures on properties within her state.
RealtyTrac, the widely cited research firm, predicts that 2012 will see an increase in foreclosure filings as the backlog continues to unravel – though still below the peak of 2010.
Nonetheless, foreclosure activity in 2011 was 33 percent below the 2009 total and 19 percent below the 2008 total.
“Foreclosures were in full delay mode in 2011, resulting in a dramatic drop in foreclosure activity for the year,” said Brandon Moore, chief executive officer of RealtyTrac. “The lack of clarity regarding many of the documentation and legal issues plaguing the foreclosure industry means that we are continuing to see a highly dysfunctional foreclosure process that is inefficiently dealing with delinquent mortgages — particularly in states with a judicial foreclosure process.”
The backlog was still evident for December. Foreclosure filings were reported on 205,024 U.S. properties last month, a decrease of 9 percent from the previous month and down 20 percent from December 2010. December’s total was the lowest monthly total since November 2007 — a 49-month low.
U.S. foreclosures in the fourth quarter took an average of 348 days to complete the process, up from 336 days in the third quarter and up from 305 days in the fourth quarter of 2010.
The length of the average foreclosure has increased 24 percent from 281 days in the third quarter of 2010, when lenders began to re-evaluate procedures as the result of the robo-signing controversy.

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