Foreclosure starts increased in five West Coast states from the previous month: California, Arizona, Washington, Oregon and Nevada. In California notice of default filings jumped nearly 70% from the previous month.
BofA initiated foreclosure procedures at a rate that more than doubled in August, jumping 116% from the previous month. Wells Fargo and U.S. Bank also showed increases but fell short of the BofA numbers.
Foreclosures process was stalled by ‘robo-signing’ scandal
Bank of America along with many others froze the foreclosure process in the fall of 2010 to sort out mishandled foreclosure documentation in a scandal that became known as robo-signing. The 14 major servicers signed consent orders with federal regulators earlier this year. After a review of 2,800 foreclosure files – roughly 200 per bank – regulators found “insufficient processes” and ordered more in-depth third party look backs.
Bank of America foreclosure starts surge
“Bank of America appears to be primarily responsible for the surge in foreclosure starts this month,” said Sean O’Toole, CEO of ForeclosureRadar. “Since their average time to foreclose has recently increased to more than a year, it is unclear that these foreclosure starts will lead to an increase in foreclosure sales anytime soon.”
Properties sold back to the bank, or REOs, increased 243% in Oregon for the month as Recontrust, a subsidiary of BofA, began clearing 2,800 foreclosures that began in April.
“The industry has not yet returned to normal or necessary foreclosure activity levels, but progress is certainly being made,” the BofA spokesperson said.
Conclusion
This is actually good for the housing market… Ending the uncertainty and clearing the backlog of inventory will help return the housing market to a state of normalcy.
Read more: Housing Wire, Tuesday, September 13th, 2011
