NEW YORK (CNNMoney) -- Foreclosure
filings rose in August as lenders in several states
continued to work through a backlog of delinquencies and
defaults, according to an industry group's report Thursday.
Foreclosure notices -- including default
notices, scheduled auctions and bank repossessions -- were
filed on 193,508 properties during the month, an increase of
1% compared with July, according to RealtyTrac, which
markets foreclosed properties. But filings were still 15%
lower than the year-earlier period.
"Bucking the national trend, deferred
foreclosure activity boiled over in several states in
August," said RealtyTrac vice president Daren Blomquist.
The foreclosure hot spots have been
shifting. Filings are rising in "judicial
states" such as New Jersey, New York and Maryland, where the
foreclosure process goes through the courts, and falling in
"non-judicial states" such as California, Arizona, Nevada
and the District of Columbia, where they're handled by a
trustee, usually a title company.
The flood of foreclosures now coursing
through the judicial states has swelled in the aftermath of
the
$25 billion foreclosure abuse settlement, signed off on
this past April, that laid out a clear path of conduct for
lenders when pursuing foreclosures. That caused many banks
to push more cases though the foreclosure pipeline.
The judicial state of Illinois, where
foreclosures were up 42% year over year, and Florida, where
there was a 16% annual increase in August, respectively, now
claim the two highest foreclosure rates. They dethroned
states such as Arizona, California, Georgia and Nevada,
according to RealtyTrac.
In Illinois, one in every 298 properties
has been hit with a foreclosure filing reported.
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Central California cities dominated the
list of metro areas with the highest foreclosure rates led
by
Modesto,
Merced and
Bakersfield.
Chicago, in eighth place, was the worst hit metro area
outside of California and the largest one in the top 20.
Other major cities represented were
Miami, at number 10,
Phoenix at 18 and
Atlanta at 19.
One silver lining of the report was that
actual bank repossessions -- the end game for the
foreclosure process when mortgage borrowers lose their homes
-- fell 2% month over month and 19% compared with August
2011, marking the 22nd consecutive month of year-over-year
declines.
Related: Housing improves in hard-hit swing states
Blomquist said he expected to see an
increase in repossessions given the surge in foreclosure
starts that occurred at this time last year. The average
time between a foreclosure start and repossession is
currently 378 days, he said.
However, a number of measures have been
put in place to help struggling homeowners hang on to their
homes. The federal government and the banks have stepped up
their efforts, offering to reduce mortgage payments through
principal reductions and lowering mortgage rates. More than
5 million borrowers have received some kind of mortgage aid
since April 2009, according to the U.S. Treasury Department.
Related: Winning in a seller's housing market
Home prices have also started to
stabilize, and that has reduced the number of homeowners who
are underwater, or owe more for their home than it is worth.
CoreLogic reported Wednesday that the
number of underwater borrowers declined to 10.8 million
during the three months ended June 30 from 11.4 million in
the first quarter. Having that home equity makes it easier
for a borrower to keep a property.
The report's other good news was that
foreclosure starts fell 13% compared with August 2011 after
three months of increases. There should be fewer bank
repossessions this time next year.