Scheduled home foreclosure auctions fall to new low in New York City

Foreclosure activity hasn't yet rebounded from the impact of lender freezes, new data shows

TRD New York /
Feb.February 09, 2011 07:40 PM
(source: PropertyShark)

Newly scheduled residential foreclosure auctions in New York City hit another low in January, continuing the downward trajectory that began in the aftermath of the so-called “robo-signing” controversy late last year.

According to new data from PropertyShark.com, which tracks the number of foreclosure auctions scheduled for the first time, there were just 106 such filings in January, down from 247 in October 2010, when the scandal surfaced and lenders began to impose temporary foreclosure freezes. The city’s peak was 473 newly scheduled foreclosure auctions in June 2009.

Each building class — including co-ops, condos, single-family homes and two-family homes — saw similarly dramatic declines in scheduled auctions of between 40 and 60 percent on a year-over-year basis.

Lis pendens, or pre-foreclosure notices, also saw a significant drop-off, with such filings down 36 percent from January 2009, PropertyShark.com indicated.

Foreclosure activity is widely expected to spike again in the coming months, as lenders begin to resume the foreclosure cases that had been delayed by their temporary freezes and as the backlog of paperwork winds its way through the court system. New York State follows a judicial foreclosure process, which tends to slow things down even more than in states that do not require court approval.

Foreclosure data firm RealtyTrac, which released its January numbers today as well, expects New York City foreclosure activity to once again reach the elevated levels seen in mid-2010 by the end of the second quarter, said Daren Blomquist, a spokesperson for the company. He added that it will likely be late 2011 or 2012 by the time foreclosure activity begins to decline consistently in the city.

Nationwide, it could take longer than that.

RealtyTrac reported a slight, 1 percent increase in nationwide foreclosure filings — including default notices, scheduled auctions and bank repossessions — in January from the previous month, but a 17 percent decrease in filings from the same month last year.

“This is less a sign of a robust housing recovery and more a sign that lenders have become bogged down in reviewing procedures, resubmitting paperwork and formulating legal arguments related to accusations of improper foreclosure processing,” said RealtyTrac CEO James Saccacio.

As that backlog is cleared out, foreclosure activity will presumably rise back to its pre-scandal levels. But there’s also a sizable inventory of residential delinquencies that haven’t even hit the foreclosure process yet.

According to a recent report by Fitch Ratings, attempts by the Obama administration and individual lenders to either modify loans or orchestrate short sales “have made little more than a dent in the large volume of outstanding distressed loans.” Just 36,500 mortgage modifications were completed nationwide in December 2010, down from a high of 86,500 in April 2009, and Fitch says it expects the majority of those modified borrowers to default again within one year.

Potentially, that means yet another U.S. foreclosure surge.

“Lenders are delaying when they file that initial default notice while they try to do a loan modification or a short sale,” Blomquist said. “A very important question for 2011 is, how many of those delayed delinquencies are going to roll into foreclosure?”


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