This is the third in a series of posts highlighting some of the findings from an in-depth report on REO trends and outlook that RealtyTrac released at the REO Expo conference on June 13, 2012. To download the full report for free, go to www.realtytrac.com/rebound.
New bank repossessions (REOs) nationwide in May 2012 were down 18 percent from May 2011, the 19th consecutive month with a year-over-year decrease.
Not coincidentally that 19-month trend began in November 2010, the month after the robo-signing controversy rocked the foreclosure industry with accusations of improper foreclosure procedures and paperwork.
Several banks imposed temporary moratoriums on REO activity immediately following robo-signing, and although those moratoriums were eventually lifted, REO activity has never returned to the levels prior to robo-signing — at least at the national level.
But in some markets, the dammed-up REO homes from the past year and a half have started to spill over the dam in some markets in 2012.
Georgia REO activity increased annually for the seventh straight month in May, jumping 31 percent compared to the previous year. Florida REO activity increased 32 percent on a year-over-year basis, the fifth straight annual increase.
Similar patterns show up in states such as Connecticut, North Carolina, Ohio, and Illinois. Even in New Jersey and New York, the states with the nation’s two longest state foreclosure processes, REO activity is beginning to break from the downward trend triggered by robo-signing.
In New York, REO activity increased 48 percent annually in February, following 15 consecutive months of year-over-year declines. New York REO activity then dropped in March, but was up again on an annual basis in April and down in May. A very similar pattern shows up in New Jersey, with an annual increase in REO activity in February following 14 consecutive months of annual decreases and then annual increases in April and May following a drop in March.
This rollercoaster pattern demonstrates the deep dysfunction that has permeated the loan servicing and foreclosure industry — not surprising given the ever-changing foreclosure ground rules over the last five years, and in particular the last 19 months.
In the next post, we’ll take a look at some of the local markets where the REO rollercoaster pattern is most pronounced, and the side effects of the restricted REO supply on housing prices. We’d also like to hear from you about what REO property trends you are seeing in your local market. Use the comment section below to share your observations.