On Wednesday, data released by RealtyTrac, the leading online marketplace of foreclosure properties, showed that the total number of foreclosed properties sold in the first quarter of 2011 was 158,434, down 16% from the prior quarter and 36% from the prior-year quarter. Also, this figure is significantly below 350,000 foreclosed property sales reported in the first quarter of 2009.
The report stated that out of this, 107,143 properties were bank-owned (down 11% sequentially and 30% year over year) while 51,291 were at some stage of foreclosure (down 26% from the prior quarter and 45% from the year-ago quarter).
Data also shows that the sale of foreclosed and bank-owned residential properties in the first quarter was 28% compared to the total residential sale. This is up from 27% in the prior quarter but down from 29% reported in the year-ago quarter.
Additionally, properties owned by banks that were sold had been repossessed about 176 days before sale. Properties that were in the early stage of foreclosure were sold 228 days on average, after being in foreclosure process.
According to the report, in a normal healthy housing market, foreclosure sales (including homes purchased after they received a notice of default or were repossessed by lenders) should account for only about 5% to the total home sales.
As per the report, average selling price of properties was $168,321, down 1.89% from the fourth quarter of 2010 and 1.46% from the first quarter of 2010. Furthermore, these properties were sold at a discount of 27% to the average selling price of non-foreclosed properties.
Moreover, the report states that Nevada recorded the highest foreclosed property sales accounting for 53% of home sales, followed by California and Arizona. Additionally, Ohio, Illinois and Kentucky reported the highest average discount on the foreclosure sales.
The report states that if sale of foreclosed homes continue at the rate of the first quarter, then it would take nearly three years to clear 1.9 million properties that are currently at some stage of foreclosure. The pace of the foreclosures has slowed down considerably in the recent months as the banks are dealing with various deficiencies in the foreclosure process.
In September-October last year, JPMorgan Chase & Co. (JPM), Bank of America Corporation (BAC) and Ally Financial Inc. temporarily suspended foreclosures across the country, following the detection of faulty foreclosure paperwork.
Following this detection, U.S. bank regulators along with the state attorney generals (AGs) were gearing up to take actions against mortgage servicers including JPMorgan, BofA, Ally Financial Inc., Wells Fargo & Company (WFC) and Citigroup Inc. (C).
Finally, on May 10, this year, U.S. mega banks decided to pay as much as $5 billion to settle the shortcomings related to the foreclosure process. Also, in mid-April, the regulators announced an agreement, according to which the 14 largest mortgage servicers, including JPMorgan, BofA, Citigroup and Wells Fargo, would review all the foreclosed loans from 2009 and compensate the losses caused by the foreclosure mess.
Irrespective of what the settlement deal might be, it would definitely take quite long to overcome the foreclosure crisis. Additionally, falling home prices, weak housing sector as well as pressure on the lenders and servicers to provide more time to the borrowers to work out new payment program will likely lead to further delays in foreclosures.
However, once these companies sort out their problems, there will be substantial rise in foreclosures. With foreclosed homes selling at a huge discount there will be definitely further rise in the sale of foreclosed properties in the next several months.
BANK OF AMER CP (BAC): Free Stock Analysis Report
CITIGROUP INC (C): Free Stock Analysis Report
JPMORGAN CHASE (JPM): Free Stock Analysis Report
Be the first to comment