Foreclosure Crisis Melting Away?

May 13th, 2013 | By | Category: Market Update

foreclosure

According to a recent article published by the National Association of Realtors, foreclosures are falling quickly as more borrowers keep up with their mortgage payments and banks complete more loan modifications or approve short sales to avoid foreclosures on their books.

For the first time since 2008, the number of borrowers who are behind on their payments or in foreclosure dropped
below 5 million, according to a new report reflecting March data by Lender Processing Services.

The number of mortgages in foreclosure dropped to below 1.69 million in March, which marks the lowest level in nearly
four years and a drop of nearly 20 percent compared to one year ago.

About 3.4 percent of all U.S. mortgages were in foreclosure by the end of March, which is a decrease from 4.2 percent a
year ago, Lender Processing Services reports.

In March, about 6.6 percent of all borrowers were in some stage of delinquency, excluding those in foreclosure. That
percentage is down by 3 percent from a year ago, but is still high by historical standards. Prior to the housing crisis,
about 5 percent of all borrowers were delinquent on their mortgages and 1 percent of loans were in foreclosure, LPS
reports.

‘Shadow Inventory’ Threat Reduced

The number of distressed homes looming in “shadow inventory” dropped 18 percent in January compared to a year ago,
according to the latest report by CoreLogic. The shadow inventory now encompasses about 2.2 million homes, or about
a nine-month supply at the current sales pace, according to CoreLogic.

In January 2010, the shadow inventory had peaked at 3 million. Since that time, it has fallen 28 percent.

Shadow inventory reflects the percentage of homes seriously delinquent or in foreclosure, and REO properties that a
lender holds that have yet to be listed for sale on the MLS.

Posting some of the largest drops in shadow inventory in the past year are Arizona (down 40 percent from a year
ago), California (33 percent), Colorado (27 percent), Michigan (25 percent), and Wyoming (23 percent).

“At this point in the recovery, we are seeing healthy reductions across much of the nation,” says Anand Nallathambi,
president and CEO of CoreLogic. “As we move forward in 2013, we need to see more progress in Florida, New York,
California, Illinois, and New Jersey, which now account for almost half of the country’s remaining shadow inventory.”
This is good news for our Sahuarita market, as most of our buyers come from others states!

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