February Foreclosure Activity Plummets 14%, Biggest Annual Drop Ever; At Lowest Level In 36 Months

Tyler Durden's picture

RealtyTrac has released a whopper of a foreclosure update. While total foreclosure activity had dropped in November when the first hint of fraudclosure was made evident, it subsequently stabilized and even increased slightly in January. Well, in February it took another step function lower, declining by a whopping 14% sequentially, and 27% Year over Year: the biggest decline in history. “Foreclosure activity dropped to a 36-month low in February as allegations of improper foreclosure processing continued to dog the mortgage servicing industry and disrupt court dockets,” said James J. Saccacio, chief executive officer of RealtyTrac. “While a small part of February’s decrease can be attributed to it being a short month and bad weather, the bottom line is that the industry is in the midst of a major overhaul that has severely restricted its capacity to process foreclosures. We expect to see the numbers bounce back, but that will likely take several months. And monthly volume may never return to its peak in March 2010 of more than 367,000 properties receiving foreclosure filings.” What is even more disturbing is the following: "Scheduled judicial foreclosure auctions (NFS) decreased 7 percent from
January and were down 49 percent from February 2010. Scheduled
non-judicial foreclosure auctions (NTS) decreased 11 percent from the
previous month and were down 7 percent from February 2010.
" This means that banks are now actively halting process in that most critical of non-judicial states - California, which means the bottom is about to fall off the market. And with the monthly cost of associated litigation in the  tens of millions for the big mortgage lenders, it is now a certainty that the banks are massively underreserved for the litigation tsunami that is coming their way, especially with MERS now out of the picture and on the verge of seeing its entire business model unwind, rendering tens of millions of mortgages potentially null and void.

Only a chart can do justice to this abysmal data:

More from RealtyTrac:

A total of 63,165 U.S. properties received default notices (NOD, LIS) for the first time in February, a 16 percent decrease from the previous month and a 41 percent decrease from February 2010. Default notices hit a 48-month low in February and were 55 percent below a peak of 142,064 in April 2009.

In states with a judicial foreclosure process (LIS), default notices decreased 19 percent from January and were down 48 percent from February 2010. In states with a non-judicial foreclosure process (NOD), default notices decreased 13 percent from January and were down 31 percent from February 2010.

Foreclosure auctions (NTS, NFS) were scheduled for the first time on a total of 97,293 U.S. properties in February, a 10 percent decrease from the previous month and a 21 percent decrease from February 2010. Scheduled foreclosure auctions hit a 27-month low in February and were 38 percent below a peak of 158,105 in March 2010.

Scheduled judicial foreclosure auctions (NFS) decreased 7 percent from January and were down 49 percent from February 2010. Scheduled non-judicial foreclosure auctions (NTS) decreased 11 percent from the previous month and were down 7 percent from February 2010.

Lenders foreclosed on 64,643 U.S. properties in February, down 17 percent from January and down 18 percent from February 2010. Bank repossessions (REO) hit a 22-month low in February and were down 37 percent from their peak of 102,134 in September 2010.

Bank repossessions in states with a judicial foreclosure process decreased 24 percent from January and were down 35 percent from February 2010, while bank repossessions in states with a non-judicial foreclosure process decreased 14 percent from January and were down 8 percent from February 2010.

And while banks may have risen in the past few days on the putback settlement progress, what Wall Street has yet to realize is that fraudclosure will extract just as large a pound of flesh, if not far larger, from the banks, and from their dividend paying ability. Which the banks are all too aware of, and are scrambling to repay as much as possible before all the bullshit swept under the rug starts to really stink up the room.