Lenders ramp up home repossessions

Foreclosure activity increased slightly during the first six months of 2012, but remained well below levels seen a year earlier.

Foreclosure activity increased slightly during the first six months of 2012, but remained well below levels seen a year earlier.

Overall home repossessions rose 2 percent from the second half of last year, resulting in 1,045,801 foreclosures by the end of June, according to a report from RealtyTrac. While this number may appear high, it was actually an 11 percent decrease from the same period in 2011.

"Additional scrutiny on how lenders and servicers process foreclosures, along with aggressive foreclosure prevention efforts by the federal government and several state governments, continue to keep a lid on the foreclosure problem at a national level," said RealtyTrac CEO Brandon Moore.

Despite the programs, foreclosure starts increased most significantly during the second quarter, Moore added. During the first three-month period of the year, the bulk of home repossessions took place in states with judicial foreclosure processes. By the second quarter, activity has spread evenly between judicial and non-judicial states.

The increase in foreclosures may have been the result of the recent multibillion-dollar settlement reached between the nation's largest mortgage lenders and state attorneys general. Leading up to this ruling, the country's home repossession rate declined dramatically, as banks dealt with allegations of wrongful foreclosure activity. However, now that the issue is resolved, many financial institutions are ramping up efforts to work through backlogs of delinquent home loans.

"The increases in foreclosure starts in the first half of the year will likely translate into more short sales and bank repossessions in the second half of the year and into next year," Moore continued.

The average foreclosure process took 378 days to complete during the second quarter. This was a slight increase from the 370 days it took during the first three months of 2012.

States paint a different picture

On a state-by-state basis, Nevada retained the top spot for foreclosures during the first six months of the year, despite a 61 percent decline of activity on an annual basis, the report said. During this period, close to one in 57 properties in the state were in some stage of the process. Meanwhile, Arizona, Georgia and California also had some of the highest rates in the country despite significant annual improvements. The presence of foreclosed houses continues to add downward pressure to property values in these markets.

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