Foreclosure transactions experience a notable decline

There were fewer foreclosure sales during the three-month period ending in August, which could be a sign of shifting tactics among lenders, rather than an improving marketplace.

There were fewer foreclosure sales during the three-month period ending in August, which could be a sign of shifting tactics among lenders, rather than an improving marketplace.

Distressed properties accounted for an estimated 20 percent of all transactions during the timeframe, according to a report from Clear Capital. This was a decline from 26 percent during the previous three-month period and the lowest percentage since April 2008.

At the peak in 2009, real estate-owned properties accounted for nearly 40 percent of all sales. However, the share is expected to increase again in the coming months to 25 percent, the report said. 

Clear Capital director of research Alex Villacorta said that these changes are the result of lenders changing the way they handle the nation's foreclosure supply, which currently totals more than 4 million properties.

"As we've seen, these different strategies paid off, specifically looking at short sales," Villacorta said. "It's certainly a good sign that there has been an acclamation. If this trend persists, there is a lot of hope to be taken from the stat, showing the recovery is entering a more mature phase."

As a result of fewer transactions for distressed homes, national home prices increased 2.9 percent in August on an annual basis, the report said. In addition, for the first time since April 2011, prices of non-distressed properties appreciated more quickly than their counterparts. 

Fewer borrowers capitalize on affordable opportunities

Not only did the number of Americans who purchased foreclosures during the three-month period ending in August decline, but mortgage records show that fewer prospective borrowers attempted to buy conventional properties in the week ending August 31.

Overall, home loan activity fell 2.5 percent from the previous week, according to a report from the Mortgage Bankers Association. During this period, purchase requests dipped nearly 1 percent on a seasonally adjusted basis.

Meanwhile, refinance activity remained unchanged, hovering at a 79 percent share of all mortgage loan applications, the report said.  

The decline in purchase activity occurred even though fixed mortgage rates declined, making the prospect of financing a home purchase more affordable. Specifically, the average rate for a 30-year FRM with a conforming loan balance fell to 3.79 percent, down from 3.8 percent. In addition, 30-year FRM jumbo loans experienced a marginal decline, falling to 4.05 percent from 4.06 percent, according to the industry group.



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