Foreclosure Filings Jump: Should You Be Worried?

Daily Real Estate News | Thursday, July 12, 2012

Banks are picking up the pace of foreclosures, with some states seeing large increases, according to the latest report from RealtyTrac. But housing experts say that despite the jump, they don’t perceive this latest wave to be as bad as previous ones.

New foreclosures filings posted a 9 percent jump in the second quarter over the first quarter. Foreclosure filings were 6 percent higher than the second quarter of 2011, which marks the first year-over-year-year increase since the last quarter of 2009, RealtyTrac reports.

Twenty states had year-over-year foreclosure filing increases of 20 percent or more, including in Indiana, Pennsylvania, South Carolina, Connecticut, Florida, and Illinois.

“The increases in foreclosure starts will likely translate into more short sales and bank repossessions in the second half of the year and into next year,” says Brandon Moore, RealtyTrac’s CEO.

However, the number of repossessions may not be as bad as previous years. Daren Blomquist, a spokesman for RealtyTrac, says that more foreclosure prevention programs may help more home owners modify their loans and stay in their homes this time around. Also, he adds, home prices are rebounding, which will likely cut down on the number of strategic defaults and people who walk away from their mortgage.

“If home prices are increasing, home owners are a lot less likely to consider walking away from their mortgages,” Blomquist told CNNMoney. “They can see some light at the end of the tunnel, where their homes might become valuable assets again.”

Source: “New Foreclosures Jump 9% in Second Quarter,” CNNMoney (July 12, 2012) and RealtyTrac