Trouble looms, even as U.S. foreclosures fall

Foreclosures decreased year-over-year for the 22nd consecutive month in July, but the housing market isn’t out in the clear just yet. While filings — which include default notices, scheduled auctions and bank repossessions — fell 10 percent since last July, foreclosure starts in the U.S. rose 6 percent in the last 12 months, marking the third straight month of annual increases in that category, according to a report released today by RealtyTrac. Prior to the last three months, foreclosure starts had tumbled for 27 consecutive months.

The divergent trends likely result from a combination of many banks putting their foreclosure processes on hold in anticipation of negotiations for a robo-signing settlement — which turned out to be worth $25 billion — and states that use the lengthier judicial process to sort through foreclosures, including Florida, first getting to a backlog of distressed loans. For example, RealtyTrac noted that Oregon, which recently began to offer borrowers a mediation option to avoid foreclosure, saw activity fall 42 percent between June and July. Daren Blomquist, a vice president of the firm, said he expected Oregon’s numbers to rebound sharply in the future, based on patterns in states with similar legislation.

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Florida ranked third among the states in terms of foreclosure filings, with foreclosure filings attached to one out of every 352 homes. That’s 14 percent more than June’s rate and a 14 percent increase over the rate in July 2011. Only California and Arizona posted higher state foreclosure rates. — Adam Fusfeld and Christopher Cameron