The amount of foreclosure filings declined 21% in November, according to statistics released today from RealtyTrac. This is is the largest monthly decline since RealtyTrac began publishing foreclosure records in January 2005. November also marks the second straight month foreclosures have declined, but the drop in November was more significant than the drop in October, when foreclosure filings declined 4.4%. There were 332,172 foreclosure filings in October, while there were 262,339 filings in November. This is the first time in 21 months (February 2009) that the amount of monthly foreclosures were under 300,000.
Even though these statistics indicate an improvement in the housing market, these reductions are not a result of improved market conditions, but are instead a temporary result of the “robo-signing controversy.” The 3 largest mortgage lenders, as well as many small lenders, suspended foreclosure proceedings in early October to investigate widespread claims of notary fraud. Since this suspension, foreclosure filings have correspondingly decreased 25%, according to the October and November statistics.
Although the recent reductions in foreclosure filings are a result of the temporary suspension, some argue this pause could not have come at a better time. Repossessions hit an all time high in September, which is the only month to ever record more than 100,000 repossessions. Therefore, even if the recent foreclosure reductions are not from organic market conditions, they at least halt the worrisome foreclosure trend and allow troubled homeowners a bit more time.
However, others argue the short-term gain for troubled homeowners may result with a long-term impact on the housing recovery. More specifically, since the foreclosure proceedings were merely suspended, not dismissed, there are arguably homes still due for foreclosure that are not able to be foreclosed. Still, even if the robo-signing controversy delays the housing recovery for 6 months, the prevention of fraud is far more important, especially when the fraud regards home ownership.
Also, while most mortgage lenders have resumed foreclosure proceedings, the internal procedures of mortgage lenders are coming under heavier scrutiny, as they deserve. This means the processing time of foreclosures has increased and these matters are receiving a more appropriate level of attention from lenders, consumers, and the courts. While longer processing times will also contribute to a delay in the housing recovery, at the same time there will be an increase in the long-term diligence that home ownership demands.
Lastly, further reductions in foreclosure filings are also projected for December. In addition to slower processing rates of foreclosures, lenders have suspended foreclosure proceedings for the last 2 weeks of December. Mortgage lenders normally do this to let families remain in their homes for the holidays. Despite a likely decline in foreclosures for December, the exact opposite is expected throughout the first quarter of 2011.