by Calculated Risk on 5/13/2010 09:51:00 AM

The phrase "foreclosure activity" can be confusing.

There are three key stages in the process: 1) Notice of Default (or Lis Pendens depending on state), 2) Notice of Trustee Sale or Notice of Foreclosure Sale, and 3) actual foreclosure (Real Estate Owned). Usually we abbreviate these stages as NOD, NTS and REO.

To calculate "foreclosure activity", RealtyTrac adds the notices together. If a property goes all the way to REO, it will be counted at least 3 times (sometimes more if multiple NODs or NTS are filed).

What this report shows is that REO is at record levels (actual foreclosures), but the initial stage (NODs) has declined substantially. The decline in NODs is good news, but the servicers are still working through a huge backlog of previously filed NODs - and REO activity (or short sales) will be high for a long time.

From RealtyTrac: Foreclosure Activity Decreases 9 Percent in April

RealtyTrac® ... today released its U.S. Foreclosure Market Report™ for April 2010, which shows that foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 333,837 properties in April, a 9 percent decrease from the previous month and a 2 percent decrease from April 2009. One in every 387 U.S. housing units received a foreclosure filing during the month.

“There were two important milestones in the April numbers that show foreclosure activity has begun to plateau — but at a very high level that will not drop off in the near future,” said James J. Saccacio, chief executive officer of RealtyTrac. “April was the first month in the history of our report with an annual decrease in U.S. foreclosure activity. Secondly, bank repossessions, or REOs, hit a record monthly high for the report even while default notices dropped substantially on a monthly and annual basis. We expect a similar pattern to continue for most of this year, with the overall numbers staying at a high level and ripples of activity hitting the various stages of the foreclosure process as lenders systematically work through the backlog of distressed properties.”