Home > Avid Law Center, Foreclosure > Foreclosures still down in February – The Calm before the storm

Foreclosures still down in February – The Calm before the storm

According to Lender Processing Services, the number of newly initiated foreclosures fell in February from January and from one year ago by around 15%. In fact, this marks the 11th straight month in which the level of foreclosure “starts” has fallen, month over month. Is this a sign of recovery?

Not likely, according to some analysts who say that banks are likely to jumpstart their foreclosures again once the $25 billion Attorney’s General settlement is finalized. However, The Wall Street Journal reports that the settlement could delay the inevitable uptick in foreclosure activity because banks still have a laundry list of requirements in the settlement.

According to the Wall Street Journal:

“Banks started the foreclosure process on 172,500 loans in February, which is the third lowest level of the past four years. Only November and December of 2011 saw lower levels of foreclosure starts.

Tuesday’s report from LPS shows that mortgage delinquencies fell to 7.6% in February, the lowest level since August 2008. Delinquencies tend to fall at the beginning of the year. Still, about 4.1% of all loans were in the foreclosure process, near the highest levels of the crisis.”

CNBC.com reports however that if the sudden stall in foreclosures is prolonged, it could lead to an overall drop in home sales, given that foreclosures are such a large share of the market. According to the National Association of Realtors, distressed sales, which include foreclosures and short sales, now make up just over one third of all existing home sales nationally, and more than half of all sales in California and other states hardest hit by the housing crash.

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