Foreclosure listing firm RealtyTrac Inc. reported today that foreclosure-related notices sent to homeowners in February dropped 14 percent from January and 27 percent compared to January 2010 while initial default notices also posted big declines.
It's possible that the drop in foreclosure-related notices could be due to lenders taking a more measured approach regarding their foreclosure processes particularly since the lending industry was under major scrutiny last year when state and federal officials launched investigations after evidence surfaced that some major banks pushed through hundreds of foreclosures every day without giving many borrowers a fair opportunity at keeping their homes.
Some of the banks that were under investigation were JPMorgan Chase, Citigroup and Bank of America. These banks have been in negotiations to settle a probe which was launched by 50 state attorneys general over handling of their foreclosures.
As a result, many lenders temporarily stopped foreclosures last fall while they reviewed and re-filed foreclosure documents and that process has continued into 2011 but at a slower pace.
According to RealtyTrac initial default notices dropped 16 percent from January and 41 percent from the same time last year. Furthermore, scheduled foreclosure auctions also declined 10 percent compared to last month and just over 20 percent from February 2010.
The decline in foreclosure notices has slowed so much that it seems as though it has stemmed the tide of additional properties potentially at risk for repossession which is good news for homeowners in trouble.
Rick Sharga, a senior vice president at RealtyTrac said, "The issue isn't whether we'll see the repossessions - it's when."
Sharga also said that if the foreclosure process were to continue to decline for several months there is a very good chance that foreclosure notices and bank repossessions will continue to remain artificially low.
"Even though foreclosure activity would look better, it would take the housing market and the economy longer to recover. We might not see the market come back until 2014 or 2015." Sharga said.
Sharga also added that if banks' foreclosure paperwork problems did not get resolved sooner, rather than later, then there was a good chance that foreclosure activity would likely spike yet again.