There is a great deal of confusion circling around foreclosures and distressed properties. The raw data would suggest that we are rebounding, with fewer homes in foreclosure or in a distressed situation. According to Realty Trac Inc. the number of homes taken back by lenders in the first half of 2011 fell approximately 30 percent from the same period in 2010. There were 421,212 homes seized in the first six months of 2011 compared to 529,633 in the first six months of 2010. The drop in foreclosure related filings in April 2011 was down nearly 9 percent from March of this year. In Utah filings were down almost 14 percent form March to April and nearly 30 percent from April of 2010.
Utah, however, remains near the top in number of foreclosure filings. Realty Trac shows Nevada at the top with one in every 97 households receiving a foreclosure notice in April. Arizona is right behind with one in 205 households, followed by California with one in 240 and then Utah in fourth with one in 322 households receiving a foreclosure notice. This number for Utah represents 1.65 percent of all homes receiving a foreclosure filing.
In May distressed homes accounted for 31 percent of existing home sales across the country with these homes selling at a 20 percent discount to non-distressed homes according to the National Association of Realtors. Of the 3,650 existing homes sold in Salt Lake, Davis, Weber and Utah counties in the first quarter of 2011, 40 percent were either short sales or foreclosures.
The decline in the number of foreclosure filings, by all accounts seems to be a bit misleading. Ordinarily this decline would suggest that homeowners are rebounding and making their mortgage payments on time, or catching up on delinquent payments. The drop in foreclosure filings, however, is generally believed to be occurring due to an increase in processing delays that are happening across the country. Lenders are now taking longer to file foreclosures against homeowners who have fallen behind in their payments. Again, Realty Trac reports that in the second quarter of 2011 the average foreclosure process was 318 days, this is 41 days longer than during the same quarter last year. As these processing delays have grown a backlog of foreclosures has developed. This scenario may create an increase in the number of foreclosures in 2012 as lenders are forced to push foreclosures farther into the future.