Foreclosure rates continued their year-over-year declines in CoreLogic's National Foreclosure Report for March, a monthly assessment of the foreclosure markets.
The 69,000 completed foreclosures in March 2012 were 14,000 less than in March 2011, though they were a slight increase from the 66,000 recorded in February of this year. Throughout 2012's first quarter, though, the 198,000 completed foreclosures were a marked decline from the 232,0000 in 2011's first quarter.
Since the start of the financial crisis in late 2008, there have been roughly 3.5 million completed foreclosures, according to CoreLogic, and the number of homes in the foreclosure inventory was unchanged from Feburary to March at 1.4 million, or, 3.4 percent of all homes. That total, though, is down from 1.5 million in March 2011; the share of seriously delinquent borrowers also fell from 7.5 percent in March 2011 to 7.0 percent in March of this year (a drop corroborated by the latest data from Fannie Mae and Freddie Mac).
Mark Fleming, the chief economist for CoreLogic, said the institute's latest data shows a clear fact of the foreclosure market – the difference between judicial and non-judicial states.
“The overall delinquency level was unchanged in March, remaining at its lowest point since July 2009,” Fleming said. “Non-judicial foreclosure markets like Nevada, Arizona, and California are experiencing significant improvements in their shares of delinquent borrowers. Some judicial foreclosure states are also improving, like Florida, but not to the extent of non-judicial markets.”
It's a point that Bill McBride of Calculated Risk has made repeatedly, and the recent RealtyTrac data – which showed the states with the largest metro increases in foreclosure activity (Pennsylvania, Indiana, New York and North Carolina) were all judicial states, and the states with the largest decreases in foreclosure activity (Oregon, Nevada, Rhode Island, Utah, Massachusetts, and California) were all non-judicial states – supported the conclusion.
“This really is a tale of two different foreclosure methods,” he wrote. “Many of the judicial states still have a long way to go.”
Anand Nallathambi, chief executive officer of CoreLogic, said the drop in completed foreclosures is because of a greater effort from banks and lenders to avoid the foreclosure process through other financial means.
“Compared to a year ago, the number of completed foreclosures has slowed,” Nallathambi said. “Since the foreclosure inventory is also coming down, this suggests that loan modifications, short sales, deeds-in-lieu are increasingly being used as an alternative to foreclosures to clear distressed assets in our communities. This is what was envisioned with the recent National Foreclosure Settlement, and can often be a better outcome for both borrowers and investors.”
That final point by Nallathambi has been one of the big surprises thus far in 2012 housing. The conventional wisdom, heading in to the year, was that the foreclosure markets would pick up to their early 2010 levels, especially after the mortgage settlement became a done deal. RealtyTrac had predicted as much in a bold Foreclosure Market Report, but those predictions have not yet come to fruition, and instead, banks and lenders have approached their foreclosure portfolios with infinitely more care and sensitivity, resulting in not a flood, but a trickle of foreclosures throughout the year and an increase in modifications and short sales, the growth of which we just covered.