The foreclosure rate fell in April on an annual basis, as a greater number of distressed borrowers were able to utilize affordable mortgage rates and government initiatives to keep their homes from being repossessed, RealtyTrac reports.
According to the foreclosure real estate data firm, the rate of home repossessions dropped 5 percent in April from a year earlier. As a result, only one in every 698 properties in the country were in some stage of the process. However, the report noted that even though the national average fell, some local markets continued to struggle.
"Rising foreclosure activity in many state and local markets in April was masked at the national level by sizable decreases in hard-hit foreclosure states like California, Arizona and Nevada," said RealtyTrac CEO Brandon Moore. "Those three states, and several other non-judicial foreclosure states like them, more efficiently processed foreclosures last year, resulting in fewer catch-up foreclosures this year."
Judicial filing activity higher than non-judicial
The report indicated that there was a significant rift in activity among states that practice judicial and non-judicial foreclosure. Currently, 24 states and Washington, D.C., practice non-judicial foreclosures. This means that when a home is being repossessed, the process is settled directly between the lender and a borrower. Activity in these areas dropped 7 percent in April from the previous month and 29 percent from a year earlier. Meanwhile, activity in states that practice judicial foreclosure declined 3 percent from the previous month, but surged 15 percent from April 2011.
FHA loans to the rescue
Though both judicial and non-judicial foreclosure states experienced month-over-month declines, there are still a number of previous homeowners who are struggling to repair their finances to buy again. However, according to a recent report from Reuters, many of these households are making a quick return to homeownership with the help of the government, namely loans with the the Federal Housing Administration.
"These are not mainstream programs geared for mainstream borrowers," Bankrate.com senior financial analyst Greg McBride told the new source.
With the assistance of FHA loans, low-income borrowers and those with damaged credit scores no longer have to put their dreams of owning a home on hold as they wait for conditions to improve. Unlike conventional home loans, FHA loans often require smaller down payments and weaker credit scores, as well as wave a number of fees often associated with the mortgage origination process.