Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

Repossessions fall 9% thanks to foreclosure freeze

chart_reo.top.gif By Les Christie, staff writer


NEW YORK (CNNMoney.com) -- Foreclosures fell in October, but it's not because fewer people are losing their homes. Instead, the market is seeing a temporary stay from banks freezing foreclose auctions to review loan documents.

Foreclosure filings of all kinds, including notices of default, notices of auctions and notices of auction sales, dropped 4.4% during the month, according to a report released by RealtyTrac on Thursday. But bank repossessions, the filing most affected by the freeze, shrank 8.7%.

Banks postponed auctions of homes with mortgages in default to make sure all all the documents were properly signed -- not robo-signed -- and that all the paperwork was in order.

"The numbers probably would have been higher except for the fallout from the recent 'robo-signing' controversy," said James Saccacio, RealtyTrac's CEO.

The drop in repossessions came after increases in four of the six previous months, topped by an all-time high in September, when 102,000 people lost their homes. In October, 93,246 homes were repossessed.

"A couple of years ago, these numbers would have been unimaginable," he said.

Sharga believes there could be a further drop-off in November, because the impact of the freeze was not fully reflected in the October report.

While that may result in further declines in bank repossessions, Sharga expects it to take many months before overall foreclosure rates really improve. There is still a very large backlog of borrowers who stopped paying their mortgages long ago but who have not yet been served with a single foreclosure filing and so are not being counted in RealtyTrac's statistics.

"Today, servicers are waiting longer and longer to put people in foreclosure," said Sharga. "It's not unusual for someone in default go six to nine months without receiving a notice of default."

He thinks this is an inventory management decision the banks make.

Why repossess another home in a neighborhood when the bank already owns a hundred just like it? Better to allow the old homeowners to remain and pick up the fallen leaves, mow the lawn and keep out the riff-raff than to evict them and pay someone else to maintain the home while it languishes on the market.

If that's the case, the foreclosure crisis will string out long after the economy regains its strength. That's one reason, that many industry experts are predicting very sluggish housing markets conditions for years to come. To top of page


Overnight Avg Rate Latest Change Last Week
30 yr fixed3.83%3.86%
15 yr fixed2.95%2.94%
5/1 ARM3.13%3.05%
30 yr refi3.95%3.98%
15 yr refi3.05%3.05%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
  • Find Homes for sale
    Real estate and homes for sale on Trulia

  • Property Type
  • Find a home in: New York | Atlanta | Chicago | Los Angeles
  • Washington D.C | Houston | Philadelphia | More options
Index Last Change % Change
Dow 16,643.01 -11.76 -0.07%
Nasdaq 4,828.33 15.62 0.32%
S&P 500 1,988.87 1.21 0.06%
Treasuries 2.19 0.02 0.83%
Data as of 2:20pm ET
Company Price Change % Change
Freeport-McMoRan Inc... 10.50 0.31 3.04%
Bank of America Corp... 16.36 -0.08 -0.49%
Apple Inc 113.29 0.37 0.33%
Intel Corp 28.42 0.70 2.53%
Alcoa Inc 9.41 0.55 6.21%
Data as of Aug 28

Sections

Efforts to unionize low-wage employees of fast-food franchisees and outside contractors get lift from decision of NLRB. More

The U.S. economy has performed well this year. But there's lots of global gloom. Which will influence the Fed the most? More

The market volatility in China and the U.S. could hit private companies, especially late-stage unicorns. More

How do you run a successful crowdfunding campaign? Indiegogo's CEO Slava Rubin offers his top tips and mistakes to avoid. More

Looking for something good on Netflix? These entertaining films will help you learn more about finance and investing. More