Banks seizing more foreclosed homes

By Tami Luhby, staff writer


NEW YORK (CNNMoney.com) -- Banks are seizing more foreclosed homes even as the number of people falling behind on their mortgages is declining.

Bank repossessions hit a record monthly high in May, according to RealtyTrac, the online marketer of foreclosed properties. Lenders took back 93,777 properties, up 1% from the previous month's record and 44% from the same period a year earlier.

Foreclosure filings, meanwhile, fell by 3% from a month earlier and edged up less than 1% from May 2009. One in every 400 homes received a foreclosure notice last month.

"Lenders appear to be ramping up the pace of completing those forestalled foreclosures even while the inflow of delinquencies into the foreclosure process has slowed," said James Saccacio, RealtyTrac's chief executive.

Overwhelmed by the mortgage meltdown, lenders have been relatively lax in repossessing homes as they try to cope with the flood of borrower defaults. As the housing market starts to stabilize, however, they are turning their attention to taking back homes.

It can take more than a year to complete a foreclosure, on average, Jack Schakett, credit loss mitigation strategies executive at Bank of America, told reporters last week. In states that require lenders to take delinquent borrowers to court before foreclosure, the process can drag on closer to two years.

Worst states

Nevada, Arizona and Florida once again top the state foreclosure rates in May, though the pace is moderating.

One in every 79 homes in Nevada received a foreclosure filing last month, down nearly 12% from April and 16% from a year ago. The state's foreclosure rate is five times the national average.

Arizona, meanwhile, saw its foreclosure activity increase by less than 1% in May from the prior month and drop 5% from May 2009. One in every 169 properties received a foreclosure notice in May.

In Florida, one in every 174 properties got a foreclosure filing in May, up 4.76% from a month ago but down nearly 14% from a year ago.

Nationwide, one in every 400 homes received a notice in May, down 3.27% from last month and up 0.45% from a year ago. To top of page

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