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Q2 Sees Sharp Drop in Foreclosures
Sales of bank-owned homes and those already on the foreclosure path fell sharply in the second quarter of 2012, reflecting a thinner slate of properties for sale in many cities as banks take a measured approach to placing homes on the market.
The combination of fewer bank-owned homes for sale and stronger demand during the traditional spring home-buying season also pushed sale prices higher. Bank-owned homes and those in some stage of foreclosure posted the biggest annual increase in average sales price since 2006, before the housing bubble burst.
As of last month, there were 1.47 million U.S. homes in some stage of the foreclosure process or owned by banks. Of the 620,751 in lenders' possession, only about 15 percent are listed for sale.
The measured approach has triggered bidding wars and led to higher prices in markets like Las Vegas, where the inventory of bank-owned homes sank to a 6.2-month supply in June.
The pool of foreclosed properties for sale also has declined because many pending foreclosure cases were put on hold last year while banks sorted through foreclosure abuse claims. A $25 billion settlement in February cleared the way for lenders to tackle that backlog of foreclosures, and the number of homes entering the foreclosure process has been rising. Still, those properties, should they end up foreclosed, are not likely to hit the market until next year.
All those factors helped set the stage for the second-quarter decline in foreclosure sales, which includes bank-owned homes and homes in the foreclosure process, which are most commonly short sales, when the lender agrees to accept less than what the seller owed on the mortgage. Lenders are increasingly favoring short sales versus waiting for troubled loans to go through the foreclosure process.
Short sales on properties that hadn't even started the foreclosure process rose 18 percent between January and May compared to the same stretch of 2011. All told, 224,429 homes in the foreclosure sales category were purchased in the second quarter. That's down 12 percent from the first three months of the year and down 22 percent from the second quarter last year.
Ken Blevins, Chief Executive Officer of Metrowest Real Estate Services, is a veteran in mortgage and default servicing with more than 23 years of experience in collections, foreclosure/bankruptcy, los....
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