Despite Robosigning Scandal, Foreclosure Activity Declines Just 4% In October

The latest number from RealtyTrac is out, and it confirms that while there has been a modest dip in October foreclosure activity, it is hardly material, leaving many to wonder if banks truly did halt any of their foreclosure activity as most had indicated (seemingly dishonestly). In October 332,172 properties received a default notice, were the subject of a scheduled auction or an REO (repossession), which are all the events which RealtyTrac defines as a foreclosure, a number just 4% lower compared to September's 347K, and higher than the 325K foreclosures recorded in July rate. Yet sifting through the numbers indicates that there is a pronounced shift within the strata: in the REO category there was a 9% drop as banks repossessed only 93.2K properties, compared to 102.1K last month, which also was an all time record. It appears the REO category is the one which is seeing the biggest bang for the robosigning buck. RealtyTrac's commentary is not surprising: "October marks the 20th consecutive month where over 300,000 U.S. homeowners received a foreclosure notice,” said James J. Saccacio, chief executive officer at RealtyTrac. “The numbers probably would have been higher except for the fallout from the recent 'robo-signing' controversy — which is the most likely reason for the 9 percent monthly drop in REOs we saw from September to October and which may result in further decreases in November." And as usual, Nevada, Florida and Arizona continue to be the states with the highest foreclosure rates.

Some details on foreclosure activity by type:

Foreclosure Activity by Type

A total of 100,575 U.S. properties received default notices (NOD, LIS) in October, a 2 percent decrease from the previous month and a 19 percent decrease from October 2009 — the ninth straight month where default notices have decreased on a year-over-year basis.

Default notices were still up on a monthly basis in several states: Florida LIS were up 2 percent from the previous month; Ohio LIS were up 10 percent; and Illinois LIS were up 24 percent. Meanwhile, NODs decreased on a monthly basis in California (down 9 percent from the previous month), Nevada (down 17 percent), and Michigan (down 18 percent).

Foreclosure auctions (NTS, NFS) were scheduled for the first time on a total of 138,361 U.S. properties in October, a 3 percent decrease from the previous month but still a 6 percent increase from October 2009. Scheduled auctions decreased month-over-month in 26 states and the District of Columbia, while 16 states posted year-over-year decreases in scheduled auctions.

Lenders foreclosed on 93,236 U.S. properties in October, down 9 percent from the record high in the previous month but still up 21 percent from October 2009. Bank repossessions (REOs) decreased month-over month in 33 states and the District of Columbia, while 14 states posted year-over-year decreases in REOs. Including October, lenders have foreclosed on an average of more than 91,000 properties each month this year.

What is strangest is that while the fraudclosure scandal was already in full force in October, coupled with various self-imposed foreclosure halts by assorted banks, the impact has so far been extremely muted. It either means that banks have been misrepresenting the degree by which they have halted their foreclosure activity, or that there is yet another major information disconnect in yet another causal important data set.