About That Foreclosure Flood…

New foreclosures down more than 30% year over year

For months, economists and industry experts have been predicting a flood of foreclosures to upset the housing market once bank settlements and other distressed mortgage initiatives were ironed out. As it turns out, however, the March Mortgage Monitor report issued by LPS shows that although new foreclosures for March are up 8.1 percent over February, they are down 31.1 percent from the same time a year ago. (via Lender Processing Services)

Completed foreclosures down nearly 20% from last year

CoreLogic’s monthly foreclosure report shows that there were 69,000 completed foreclosures in March, compared with 85,000 last March — a decrease of 18.8 percent. According to CoreLogic’s CEO, the reduction in completed foreclosures, given that the foreclosure inventory is also shrinking, “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.” (via CoreLogic National Foreclosure Report - March 2012)

Short sales outpace foreclosure sales

For the first time, it appears that lenders are finally catching on to the idea that “short sales should be the dominant way of disposing of assets [in distress],” as Jonathon Weiner of Lender Processing Services puts it. In January 2012, short sales were 23.9 percent of home purchases, while foreclosed homes accounted only for 19.7 percent. A year ago, foreclosures were 24.9 percent while only 16.3 percent of home sales were short sales. Weiner also observed that the growing preponderance of short sales is a positive sign that the country is finally making real progress working through its overwhelming inventory of distressed properties — and could be a sign that home prices will bottom out this year. (via Bloomberg Businessweek)