According to data released by RealtyTrac last week, total number of foreclosed properties sold in the first quarter of 2012 was 233,299, up 8% from the prior quarter and almost at par with the prior-year quarter. Out of this, 109,521 properties were at some stage of foreclosure (up 16% from the prior quarter and 25% from the year-ago quarter), while 123,778 were bank-owned (up 2% sequentially but down 15% year over year).
Additionally, the sale of pre-foreclosed and bank-owned residential properties was 26% of the total residential sale in the first quarter, growing from 22% in the prior quarter and 25% reported in the year-ago quarter. Moreover, properties that were in the early stage of foreclosure were sold 306 days on average, after being in foreclosure process. Properties owned by banks that were sold had been repossessed about 178 days before sale.
Further, average selling price of properties was $161,214, down 1% from the fourth quarter of 2011 and 2% from the first quarter of 2011. Also, these properties were sold at a discount of 27% to the average selling price of non-foreclosed properties. Moreover, Nevada recorded the highest foreclosed property sales accounting for 56% of all residential home sales, followed by California (47%) and Georgia (46%).
The jump in foreclosed property sales was primarily driven by a rise in short-sale, where the homeowner sells the property at a lower amount than owned on his loan. Likewise, lenders also support short-sales, which are quicker ways of getting back some amount from their mortgages than waiting for foreclosures (a more expensive and time-consuming process).
Though there was a drop in foreclosures in the first quarter, upcoming months will surely witness a hike following the $25 billion settlement deal that took place between five mortgage servicers – JPMorgan Chase & Co. (JPM), Bank of America Corporation (BAC), Citigroup Inc. (C), Ally Financial Inc. and Wells Fargo & Company (WFC), 49 states’ attorneys general and the regulators. The deal is expected to speed up the rate of the foreclosure activities across the nation, which was almost frozen till now.
Moreover, the settlement deal clearly describes the procedures to be followed while foreclosing a property. This will allow the mortgage servicers to step up the foreclosure activities.
However, it would take quite long to overcome the foreclosure crisis. Also, there will be pressure on the home prices across the nation as many properties are expected to come to the market due to increased foreclosure activities. Though the huge surge in foreclosures may dampen the housing prices in the near term, this will enable the housing market to revive over the longer term.
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