After 8 consecutive months of rising foreclosure filings, the total number of foreclosure filings in October declined 4.39%. There were 332,172 foreclosure filings in October – down from a record 347,420 filings in September, according to statistics from RealtyTrac. Among the 332,172 filings in October, 93,236 were bank repossessions, whereas the remaining filings were default notices or auction notifications. Contrarily in September, there were 102,134 bank repossessions – the only month to ever record more than 100,000 repossessions. Despite these declines of total filings and bank repossessions in October, the amount of foreclosure filings remained above 300,000 for the 20th consecutive month. Also, 5 states accounted for 53% of the total filings in October: California (20%), Florida (17%), Michigan (6%), Illinois (5%), and Arizona (5%).
The major reason why foreclosures declined in October is due to the recent contention of foreclosure proceedings – commonly referred to as the “robo-signing controversy.” By October 8th, the 3 largest mortgage lenders, JP Morgan, Ally Financial (formerly GMAC), and Bank of America, completely halted each of their foreclosure proceedings in order to investigate foreclosure fraud claims. Accordingly, the amount of foreclosures declined in October. Instead of improved market conditions explaining the reduction in foreclosure filings, the reduction is likely due to the temporary suspension of foreclosure proceedings from the major lenders, as well as other smaller lenders. Tomorrow, the leaders from these mortgage companies will go before the Senate Banking Committee for special congressional hearings about the recent controversy and proper rectification.
Lastly, the suspension of foreclosure proceedings from these major lenders is no longer in effect, but they have each admitted the rate of foreclosures have slowed because of further review of each case. As a result, further reductions in foreclosures will also be likely in coming months.