Foreclosures Down 24% in 2011

Foreclosures in December of 2011 declined year-over-year to 55,000 from 67,000. The foreclosure drop has been in the midst of recent months' news about the regulation regarding robo-signing, including a projected settlement resulting from the litigation between states and the nation's five biggest banks over mortgage-servicing practices.

The number of mortgages that are late 90 days or more fell to 7.3% from 7.8% a year earlier, but rose from 7.2% in the previous month. Foreclosure inventory also witnessed a similar downward slope to 8.4% from December 2010. Foreclosed homes totaled 1.4 million in December 2011, which is about 3.4% of all homes with outstanding loans. Real estate owned sales moved ahead of the completed foreclosures in December.  This is called "distressed-clearing ratio" which rose to 1.03 from 0.94 in November.  The new HARP 2.0 refinance guidelines should also help with a further drop in foreclosures.

Even though there have been factors helping the foreclosure filings such as judicial and regulatory constraints, this was the first time in a year that REO sales moved ahead of completed foreclosures, partly because of decrease in the foreclosure inventory.”

Florida came out on top again by far in foreclosure inventory as a percentage of all mortgages.  That number was 11.9% in December, though that's down 0.1% from a year earlier. New Jersey came in next with 6.4%, followed by Illinois at 5.4%, Nevada at 5.3% and New York at 4.6%. About 3.2 million foreclosures have closed since the onset of the financial crisis in September 2008.

Gretchen Wegrich

Gretchen Wegrich is an editor at Lender411. She specializes in mortgage basics, personal finance and green living. She graduated with a bachelor's degree in writing from University of California, San Diego and previously worked at the Santa Cruz Sentinel. Contact her at gretchen@lender411com.