by Calculated Risk on 10/11/2012 11:08:00 AM

From RealtyTrac: Foreclosure Activity Drops to 5-Year Low in September

RealtyTrac® ... today released its U.S. Foreclosure Market Report™ for September and the third quarter of 2012, which shows foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 180,427 U.S. properties in September, a decrease of 7 percent from the previous month and down 16 percent from September 2011. September’s total was the lowest U.S. total since July 2007.
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“We’ve been waiting for the other foreclosure shoe to drop since late 2010, when questionable foreclosure practices slowed activity to a crawl in many areas, but that other shoe is instead being carefully lowered to the floor and therefore making little noise in the housing market — at least at a national level,” said Daren Blomquist, vice president at RealtyTrac. “Make no mistake, however, the other shoe is dropping quite loudly in certain states, primarily those where foreclosure activity was held back the most last year.

Click on graph for larger image.

This graph from RealtyTrac shows foreclosure activity for the last three years.

Some of the decline in foreclosure activity this year is related to the increased emphasis on short sales and modifications.

More from the press release:

“Meanwhile, several states where the foreclosure flow was not so dammed up last year could see a roller-coaster pattern in foreclosure activity going forward because of recent legislation or court rulings that substantively change the rules to properly foreclose,” Blomquist added. “A backlog of delayed foreclosures will likely build up in those states as lenders adjust to the new rules, with many of those delayed foreclosures eventually hitting down the road.”

The national decrease in September and the third quarter was driven mostly by sizable decreases in the non-judicial foreclosure states such as California, Georgia, Texas, Arizona and Michigan.

Several judicial foreclosure states — including Florida, Illinois, Ohio, New Jersey and New York — continued to buck the national trend, registering substantial year-over-year increases in foreclosure activity in September and the third quarter.

The second graph from RealtyTrac shows the percent change for the largest states. Judicial states, like New Jersey, are seeing an increase in activity (they are backed up for years), but non-judicial states like California are seeing less foreclosure activity.