Foreclosure Sales Plummet in May

RISMEDIA, July 5, 2011—There are significantly fewer foreclosure sales today than there were before foreclosure moratoria were put into place during the Robogate scandal last fall and foreclosure sales are declining.

The precipitous drop in foreclosure sales is keeping foreclosure inventories high in many markets. In fact, the number of mortgages that are 90 or more days delinquent, combined with the foreclosure inventory at the end of May outpaced foreclosure sales by 50:1.

The May Mortgage Monitor report released by Lender Processing Services, Inc. shows that mortgages that are 90 or more days delinquent combined with the foreclosure inventory totaled 4,084,557. With foreclosure sales at 78,676 at month end, the volume of serious delinquencies and foreclosures remains high.

The May data shows that the biggest drop in foreclosure sales has been seen in East Coast states, with a decline of 96 percent in DC, 80 percent in Maryland, 79 percent in New York, and 75 percent in New Jersey. Additionally, inventories of foreclosures in judicial states have increased twice as much as inventories in non-judicial states over the last year. The average time spent in foreclosure continues to extend, with more than 33 percent of borrowers in foreclosure not having made a payment in over two years.

New problem loans, defined as loans that were current six months ago and were 60 or more days delinquent at the end of May, are now less than half the peak levels seen in 2009, and are currently at 1.27 percent. Overall, when compared to historical norms, delinquencies are almost double and foreclosures are eight times higher.

Negative equity also remains a concern, with nearly 30 percent of current loans in a negative equity position. The equity impact on new seriously delinquent loans is significant, with loans significantly under-water defaulting up to 10 times as much as loans with equity.

For more information, please visit www.realestateeconomywatch.org.