(Bloomberg News) Foreclosure filings in the U.S. tumbled last month to the lowest in almost four years as banks weighed down by an increasing inventory of seized homes delayed processing defaults, according to RealtyTrac Inc.
A total of 214,927 properties received default, auction or repossession notices in May, the fewest since November 2007, the Irvine, California-based data company said Thursday in a statement. Filings dropped 33 percent from a year earlier and 2 percent from April. One in 605 households got a notice.
Foreclosure filings have fallen for eight straight months on a year-over-year basis as banks rework their documentation procedures following claims they improperly repossessed homes. Weak demand from buyers is making it difficult for lenders to sell the properties that they already have on their books, known as real estate owned, or REOs, according to RealtyTrac.
"Foreclosure processing delays continue to mask the true face of the foreclosure situation," James J. Saccacio, RealtyTrac's chief executive officer, said in the statement. "Even at a significantly lower level than a year ago, the new supply of REOs exceeds the amount being sold each month."
Unemployment and falling home values are limiting property sales and have pushed about 28 percent of mortgage holders underwater on their loans, meaning they owe more than the home is worth, according to Zillow Inc. The U.S. jobless rate rose to 9.1 percent in May from 9 percent the previous month, the Labor Department reported June 3.
Home prices slid 3.6 percent in the first quarter to the lowest level since 2003 in the S&P/Case-Shiller index of values in 20 U.S. cities. Confidence among builders in June was at the weakest in nine months, as executives expressed pessimism about the prospect of higher sales, the National Association of Home Builders/Wells Fargo sentiment index showed yesterday.
The inventory of distressed homes nationwide stands at 1.8 million, which would take about three years to sell at the current pace, Daren Blomquist, RealtyTrac's communications manager, said in a telephone interview.
Default notices were filed on 58,797 U.S. properties last month, the lowest in more than four years and a 39 percent decline from a year earlier, according to RealtyTrac.
Auctions were scheduled for 89,251 properties, down 33 percent from May 2010. Lenders seized 66,879 homes, a 29 percent decrease from a year earlier.
States where courts oversee foreclosures showed a 45 percent decrease in filings from a year earlier, while non- judicial states had a 25 percent decline and accounted for almost two-thirds of the national total, RealtyTrac said.
Nevada had the highest rate of foreclosure filings per household for the 53rd straight month, with one in 103 getting a notice. Arizona had the second-highest rate at one in 210 and California was third at one in 259. Michigan, Utah, Georgia, Idaho, Florida, Illinois and Colorado also ranked in top 10.
Five states accounted for more than half of the U.S. filing total, led by California's 51,906. Florida was second at 19,192 and Michigan third at 14,614. Arizona, Nevada, Illinois, Georgia, Texas, Ohio and Wisconsin rounded out the top 10.
RealtyTrac sells default data from more than 2,200 counties representing 90 percent of the U.S. population.