The headline foreclosure news for the past couple of months has been the suspension of foreclosures by a handful of lenders after robo-signers and procedural deficiencies were uncovered in their servicing shops.
[IMAGE]The foreclosure tracking firm ""ForeclosureRadar"":http://www.foreclosureradar.com says while the announcements initially focused on 23 judicial foreclosure states outside of the company's coverage area, ""GMAC"":http://www.gmacmortgage.com, ""PNC"":http://www.pnc.com, and ""Bank of America"":http://www.bankofamerica.com all later expanded their suspensions, and the impact is now beginning to show up in non-judicial West Coast states.
After the announcements, ForeclosureRadar says it saw evidence of the suspensions as early as Tuesday, October 12. It should be noted that ForeclosureRadar tracks every foreclosure and provides daily auction updates, providing a more current picture of activity that statistics based on trustee deeds that are filed weeks after a foreclosure auction.
Foreclosure sales dropped dramatically in October across ForeclosureRadar's coverage area, which includes Arizona, California, Nevada, Oregon, and Washington state.
Sean O'Toole, CEO and founder of ForeclosureRadar, says Bank of America’s freeze is having the greatest influence on foreclosure sales activity. And with BofA’s suspension still in effect as it continues ongoing reviews of cases in non-judicial states, O’Toole expects November’s foreclosure sales to be down as well, however, he says the long-term impact on western state markets will be minimal.
Initial foreclosure filings were less impacted by the announced suspensions. Filings by Bank of America dropped slightly just after their announcement, but began picking up the following week, according to ForeclosureRadar. The company says PNC appears to have
[COLUMN_BREAK]largely stopped new filings, but they typically represent less than 2 percent of total filings, so their impact was minimal.
""Despite a short-term impact to foreclosure sales, the latest foreclosure scandal will likely lead to little more than a new scam perpetrated on those who have already lost their home,"" O'Toole said. ""Much like the cottage industry of loan modification consultants that took up-front fees and provided little in return, we are now seeing consultants promising to overturn foreclosure sales, despite any experience in actually doing so.""
""Arizona"":http://www.foreclosureradar.com/arizona-foreclosures recorded a 12.9 percent drop in notice of trustee sale filings in October from September, and a 15 percent drop from a year earlier in ForeclosureRadar’s study. The state’s inventory of REO properties was flat compared to September, which was likely helped by the 27 percent drop in foreclosures that went back to the bank. Properties sold to third parties also dropped 26.5 percent in October.
In ""California"":http://www.foreclosureradar.com/california-foreclosures, pre-foreclosure inventories dropped 11.8 percent in October from the prior month, largely thanks to a 16.8 percent drop in notice of default filings. Foreclosure suspensions led to a 29.9 percent decline in foreclosures that turned into REOs, and a 26.4 percent decline in those sold to third parties at auction. Despite the significant decline in new bank-owned properties, ForeclosureRadar says REO inventories actually rose, as REO resales continued to slow.
After a dramatic rise of 39.2 percent in September, foreclosure sales in ""Nevada"":http://www.foreclosureradar.com/nevada-foreclosures dropped 36.6 percent in October. As a result, ForeclosureRadar says the impact of suspensions simply brought overall foreclosure sales back to typical levels in Nevada. A 41.5 percent drop in sales to third parties brought their purchase down to the lowest level since December 2009.
Foreclosure activity was down across the board in ""Oregon"":http://www.foreclosureradar.com/oregon-foreclosures. Default notices fell 14.8 percent and notice of trustee sale filings declined a significant 35.8 percent. Foreclosure sales were also down, with properties going back to the bank down 38.2 percent and those sold to third parties at auction down 36.5 percent.
""Washington"":http://www.foreclosureradar.com/washington-foreclosures was the least impacted by foreclosure suspensions of any state that ForeclosureRadar covers, with foreclosure sales down just 8.2 percent. Foreclosure sales that went back to the bank as REO declined 10.6 percent, while those sold to third parties partially offset that decline with an increase of 21.1 percent.