Bank repossessions — often the last phase of a foreclosure when the lender takes back ownership of a home — were up 60 percent last month, compared to a year ago, according to the latest data from RealtyTrac, which covers November’s foreclosure-related activity.
There were a total of 40,329 properties repossessed by lenders (REOs) in November, up 10 percent from the previous month and up a significant 60 percent from a year ago — the ninth consecutive month with a year-over-year increase in REOs.
Why are bank repossessions up so sharply as overall foreclosure filings continue to decline? Banks and courts are finally making headway in working through long-delayed foreclosure proceedings. Bank repossessions usually come at the end of the foreclosure process. Foreclosures usually begin when a borrower/owner defaults on mortgage payments and the lender files a public default notice.
One way a foreclosure process concludes is by the lender taking ownership of the property, usually with the intent to re-sell it on the open market. The lender can take ownership either through an agreement with the borrower/owner during pre-foreclosure or by buying back the property at the public auction. These are also known as bank-owned or REO properties.
Through the first 11 months of 2015 there have been 410,249 completed foreclosures, up 35 percent from 303,064 REOs during the same time period in 2014.
REOs increased from a year ago in 41 states, led by Tennessee (up 608 percent), Mississippi (up 341 percent), Texas (298 percent), Nebraska (up 295 percent), New York (up 270 percent) and New Jersey (up 205 percent).
“Banks are continuing to work through the backlog of lingering foreclosures, pushing bank repossession numbers higher in the short term even as foreclosure starts drop to new lows,” said Daren Blomquist. “This also means the share of active foreclosures tied to bubble-era loans is shrinking, with 59 percent of all loans in foreclosure originated between 2004 and 2008. While that is still a disproportionate share of active foreclosures, it continues to decrease from 61 percent earlier this year and 75 percent two years ago.”
Overall foreclosure filings — which includes default notices, scheduled auctions and bank repossessions — were reported on 104,111 U.S. properties in November, a decrease of nearly 10 percent from the previous month and down more than 7 percent from a year ago.
Those states that saw the most completed foreclosures for the month of November included Florida (6,435 REOs), Texas (3,107 REOs), California (2,567 REOs), Illinois (2,338 REOs), and Georgia (2,302 REOs).