Here are a few bits of news that came across my desk yesterday and my interpretation.
Foreclosure Filings Drop Nationally In April- If you know me you are aware I do not get to hung up on these month to month comparisons. One month does not a trend make. What is interesting is the statement by RealtyTrac’s CEO that there are two significant milestones in the April numbers that indicate foreclosure activity may have plateaued.
The first, April 2010 is the only month in the history of RealtyTrac’s report with an annual decrease in U.S. foreclosure activity. Secondly, bank repossessions, or REOs, hit a record monthly high for the report even while default notices dropped substantially on both a monthly and annual basis.
I looked it up. RealtyTrac started keeping these statistics in 2005. So, we just experienced the first annual decline in foreclosures in the last five years. Interesting..but significant?
In this report, Florida dropped to third in filings, with a impressive 25% decline in filings over the same period of 2009. Indiana remains back in the pack at 18. Remember when Indiana led the nation in foreclosures?
Still over 330,000 properties received foreclosure filings in April…so a 2% drop in a year to year comparison is relative to very high numbers of ongoing defaults. Speaking of defaults…
Shadow Inventory To Peak In Summer Of 2010- In another sign that the foreclosure inventory is starting to slowly get sopped up, Barclays released this report earlier in the week. Barclays defines shadow inventory as loans in 90 day plus delinquency or already in foreclosure. The reason the term “shadow” is used is that traditional foreclosure statistics do not take these defaulting loans into account because they have not actually been foreclosed. Government programs have held back foreclosure actions making certain information, like Realty Tracs, left to further interpretation.
So, what can be concluded is this. Foreclosures are still at record highs and there are still approximately 4.5 million loans in default that have not been foreclosed. RealtyTrac’s headlines of a decline are great…but like everything today, we return to the old “is it real or is it Memorex?” Time will tell as we see if foreclosures can level off at the same time the shadow inventory declines due to successful modification and short sale programs, or the return to finanancial health that allows a borrrower to recover.
My point is you can’t read these foreclosure headlines and jump to any conclusions. You have to assess the whole complex picture in the current environment.
Tags: Foreclosure, Shadow Inventory, Wilmoth
