Government real estate data shows that foreclosure activity fell significantly during the fourth quarter of 2011.
According to a recent report from the Office of the Comptroller of the Currency, the number of foreclosures started by banks, lenders and other financial institutions dipped 16 percent from the previous quarter. On an annual basis, foreclosures were down 17.9 percent. However, despite the decline, there were still 292,173 homes in some stage of the foreclosures process during the three-month period.
Meanwhile, the OCC found that the number of completed foreclosures rose 2.5 percent from a quarter earlier to 116,060. Even though this was only a slight increase from the previous three-month period, it was 22.1 percent higher from a year earlier.
In the wake of the housing market collapse, the foreclosure process was nearly halted as a result of wrongful practice, such as the robo-signing scandal. However, now that the nation's largest mortgage lenders have agreed on a $25 billion settlement with a number of state attorneys general on behalf of homeowners wrongfully foreclosed on, the process is set to revamp during the course of 2012.
There was an estimated 1.27 million properties in the national foreclosure inventory at the end of 2011. This is a 4.1 percent decline from the previous quarter. Even though the inventory thinned, the large presence of these distressed properties continues to add downward pressure on home prices. Should the foreclosures activity rise in the coming months, the inventory could see a significant influx of units.
As a result of a high rate of foreclosure, compared to the housing market's peak, home prices continued their descent into negative territory at the beginning of 2012. The most recent Standard & Poor's/Case-Shiller Home Price Index found that overall prices fell 0.8 percent in January from a month earlier.
"Despite some positive economic signs, home prices continued to drop," said S&P index committee chairman David Blitzer. "The 10- and 20- city composites and eight cities - Atlanta, Chicago, Cleveland, Las Vegas, New York, Portland, Seattle and Tampa - made new lows. Detroit and Phoenix, two cities that have suffered massive price declines, plus Denver, saw increasing prices versus January 2011. The 10-city composite was down 3.9 percent and the 20-city was down 3.8 percent compared to January 2011."
While falling home prices are negative for many homeowners, they have provided affordable conditions for prospective buyers who were priced out of becoming owners at the the housing market's peak.