Completed foreclosures dropped more than 25 percent across the country in January, according to data released Wednesday by online foreclosure analytic company and real estate information provider ForeclosureS.com. Total completed foreclosures came in at 72,694 for the month, down from the 97,8411 completed foreclosures reported for December. Pre-foreclosure filings also showed a significant decline for the month, dropping 12 percent from December’s data and suggesting completed foreclosures will continue to decline in coming months, according to the data.
Completed foreclosures in California alone dropped 31 percent to 14,351 foreclosures in January, the lowest level since December 2007 and less than half the foreclosures reported in the state’s peak month of September 2008. According to ForeclosureS.com’s data, the state accounted for 19.7 percent of the nation’s foreclosures. Completed foreclosures dropped most sharply in the Midwest region, falling 32 percent from December to a total 12,716 completed foreclosures. The second-highest decline occurred in the Southwest, where completed foreclosures slumped 28 percent to a total 33,513. The Northeast showed the smallest decline of 10 percent to a total 4,495 completed foreclosures in January.
“It’s not quite time to pop that celebratory champagne,” said ForeclosureS.com president Alexis McGee. “But Fannie Mae (FNM: 0.5916 +7.56%) and Freddie Mac’s (FRE: 0.592 +7.64%) moratorium on foreclosures before the holidays, big lenders emphasizing loan workouts, and states taking steps to slow down foreclosures are all are working together to make a difference.”
For example, California passed a law in September 2008 slowing foreclosure filings by increasing the wait period before a servicer can file a Notice of Default. The state saw in December a rebound to high levels of foreclosure activity, according to data reported in January by ForeclosureRadar. The high levels of pre-foreclosure filings suggested the state was seeing an influx of the foreclosures that had been temporarily held up by the legislation. And, while the new data might appear to paint California as entering some sort of recovery stage, market observers should not rule out the possible effects of a combination of other foreclosure prevention efforts like the foreclosure and eviction suspension announced by the GSEs back in November and subsequently extended months beyond its original termination date.
A recent push for all things modification may also have put downward pressure on the number of properties moving through the REO process, although some substantial glitches in modification programs may prove to have little lasting positive effect. Initial data from the Hope for Homeowners program showed only marginal success as far as turnout was concerned, with only several hundred applications reported in the first month or so of operation. A report released by Valparaiso law professor Alan White in mid-December showed only 35 percent of voluntary mortgage modifications actually reduced borrowers’ monthly payments while 45 percent resulted in an increased monthly payment after all the various fees and other expenses were factored in.