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Improvements in foreclosure numbers may signal revitalization of mortgage market

19 Mar
Foreclosure signs, Mortgage crisis,

Foreclosure signs, Mortgage crisis, (Photo credit: Wikipedia)

According to CoreLogic’s National Foreclosure Report for January 2012, the distressed clearing ratio, which calculates the rate at which REO properties are sold, was 0.69 for January 2012, down from 0.80 in December 2011. The ratio is found by dividing the number of REO sales by the number of completed foreclosures. A higher ratio indicates a faster pace of REO sales relative to the pace of completed foreclosures.

“The pace of completed foreclosures is gradually increasing again, but the clearing ratio is falling as REO sales have slowed in the winter months,” said Mark Fleming, chief economist with CoreLogic, who also added non-judicial foreclosure states completed almost twice as many foreclosures per 1000 active loans as judicial foreclosure states in January.

On a year-over-year basis, the number of foreclosures actually dropped, going from 80,000 in January 2011 to 69,000 in January 2012.

Approximately 1.4 million homes, or 3.3 percent of all homes with a mortgage, were in the foreclosure inventory as of January 2012, compared to 1.5 million, or 3.6 percent, in January 2011. Nationally, the number of loans in the foreclosure inventory decreased by 145,000, or 9.5 percent in January 2012 compared to the previous year.

The foreclosure inventory is the stock of homes in the foreclosure process. A property moves into the foreclosure inventory when the mortgage servicer places the property into the foreclosure process after serious delinquency is reached and remains there until the foreclosure is completed.

“We are encouraged by the noticeable progress we are seeing over the last several months in the mortgage industry,” said Anand Nallathambi, CEO of CoreLogic.  “During the last several years, the industry has faced enormous challenges working through difficult and complex issues.  We are hopeful that these recent improvements are early signals of revitalization in the mortgage market.”

The share of borrowers nationally that were more than 90 days late on their mortgage payment, including homes in foreclosure and REO, decreased to 7.2 percent in January 2012, compared to 7.8 percent a year ago, but remained unchanged compared to December 2011.

Five non-judicial states with the highest percentage of foreclosure inventory

Nevada (5 percent), New York (4.7 percent), Kentucky (2.8 percent), Oregon (2.8 percent), and Mississippi (2.7 percent)

Five states with the highest foreclosure rates

Florida (11.8 percent), New Jersey (6.4 percent), Illinois (5.3 percent), Nevada (5.0 percent), and New York (4.7 percent)

Five states with the lowest foreclosure rates

Wyoming (0.7 percent), Alaska (0.8 percent), North Dakota (0.8 percent), Nebraska (1.1 percent), and Texas (1.3 percent)