The Housing Market Is Experiencing 'Dangerous Foreclosure Flare-Ups'

Seattle skyline

Photo: Reuters

February foreclosure filings increased two per cent month-over-month (mum) in February, according to the latest foreclosure report from RealtyTrac. These include default notices, auctions, and real estate owned (REOs) properties. But filings were down 25 per cent from a year ago.One in every 849 homes received a foreclosure filing in February, down from a foreclosure rate of one in every 869 homes the previous month.

“The U.S. foreclosure inferno has been effectively contained,” according to Daren Blomquist, vice president at RealtyTrac. “But dangerous foreclosure flare-ups are still popping up in states where foreclosures have been delayed by a lengthy court process or by new legislation making it more difficult to foreclose outside of the court system.”

Foreclosure flare-ups

In Washington for instance, foreclosure activity was up for the 10th straight month, rising two per cent mum, and up 123 per cent from a year ago. It now has the nation’s fifth-highest foreclosure rate, for the first time since RealtyTrac began reporting on foreclosures in 2005.

Maine saw an over 400 per cent year-over-year (YoY) surge in foreclosure activity. Meanwhile, Maryland’s foreclosure activity was up for the eighth straight month, rising 105 per cent on the year and 49 per cent on the month.

Foreclosure starts chart

Photo: RealtyTrac

And the rise in Maryland’s foreclosure activity was driven by a 319 per cent jump in foreclosure starts – the pace at which mortgages enter the foreclosure process.Overall, foreclosure starts were up 10 per cent in February, rising for the first time in three months. They were however down 25 per cent YoY.

Rising foreclosure starts are cause for concern, because the decline in inventory supported home prices, and in large part helped drive the housing recovery.

Housing analysts have been revising up their 2013 home price forecasts, with Bank of America Merill Lynch and Capital Economics calling for an eight per cent rise in home prices.

For now, Florida, Nevada and Illinois continue to have the nation’s highest foreclosure rates.

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