The Real Deal New York

Foreclosure backlog continues to depress national filing rate

NY sees 33.4 percent decline year-over-year
April 12, 2012 02:30PM

National foreclosure filings declined in the first quarter to their lowest level in more than four years, according to a RealtyTrac report released today, and foreclosures in New York are down in the last year but have trended upwards of late. Default notices, scheduled auctions and bank repossessions were filed for 572,928 properties in the quarter, down 16 percent from the prior-year quarter. It’s the fewest filings recorded since the fourth quarter of 2007.

In March alone, foreclosure filings declined 4 percent since February and 17 percent since March 2011 to their lowest level since July 2007.

However, the falling foreclosure filing rate should not be confused with signs of a recovery, RealtyTrac said.

“The low foreclosure numbers in the first quarter are not an indication that the massive reservoir of distressed properties built up over the past few years has somehow miraculously evaporated,” CEO Brandon Moore said. Rather, those foreclosed properties are still fighting their way through the prolonged foreclosure process in states that use the judicial process. In those states, which include New York, foreclosure activity actually increased 10 percent year-over-year in the first quarter, and 8 percent since the fourth quarter of 2011.

Moreover, foreclosure starts increased 7 percent nationwide in March compared to February, marking the third consecutive month of increases.

“The dam [holding back foreclosures] may not burst in the next 30 to 45 days, but it will eventually burst, and everyone downstream should be prepared for that to happen,” Moore said.

New York had the fifth lowest foreclosure rate in the nation in the first quarter, with just one in every 1,476 households in some stage of foreclosure, a 33.4 percent decline since the first quarter of 2011, but a 9.3 percent increase on a quarterly basis. In March, the state experienced a 22.2 percent increase in the rate of foreclosures. New York also remains notorious for its lengthy foreclosure process, which averaged 1,056 days in the first quarter, top in the nation, and nearly three times the U.S. average of 370 days. — Adam Fusfeld