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The number of residential foreclosure filings in the U.S. declined by 9 percent from October to November despite a yearly spike in the number of foreclosure starts, according to RealtyTrac's U.S. Foreclosure Market Report for November 2014 released Thursday.
Residential foreclosure filings, which include default notices, scheduled auctions, and bank repossessions (REO), totaled 112,498 nationwide for November – down 9 percent month-over-month and 1 percent year-over-year, according to RealtyTrac. November broke a string of 50 consecutive months in which foreclosure filings declined year-over-year. Foreclosure filings averaged one for every 1,170 properties in the U.S. in November, according to RealtyTrac.
Foreclosure starts, which totaled 55,906 in November, increased year-over-year by 6 percent for the month, ending a streak of 27 consecutive months with a year-over-year decrease, according to RealtyTrac. Foreclosure starts inched downward by 1 percent from October to November, RealtyTrac reported.
"The housing market is struggling to find the new normal when it comes to a tolerable level of foreclosure activity in this post-Great Recession economy," said Daren Blomquist, VP at RealtyTrac. "Finding that new normal requires striking a balance between too much loan risk, which would result in another housing meltdown, and too little risk, which could result in a stunted recovery."
Meanwhile, RealtyTrac reported that the total of 50,102 scheduled foreclosure auctions represented a decline of 16 percent in November after hitting an 18-month high in October. Year-over-year, foreclosure auctions increased by 5 percent in November, according to RealtyTrac. Lender repossessions (REO) totaled 25,249 for November, a decline of 10 percent from October and 17 percent from November 2013. November was the 24th straight month in which REO activity experienced a year-over-year decline, RealtyTrac reported.
The percentage of mortgage loans in foreclosure with a vintage year of 2014 (0.27 percent) was higher than that of those originated in 2013 (0.20 percent) and 2012 (0.19 percent), according to RealtyTrac. The percentage of foreclosures was highest for loans originated in 2006 and 2007 (2.30 percent and 2.28 percent, respectively) just prior to the burst of the housing bubble.
"Foreclosure rates on 2014-originated loans are actually higher than 2013-originated loans nationwide and in many markets, indicating that lenders are open to a slightly higher level of risk than we’ve seen over the past five years of extremely tight lending standards," Blomquist said. "But it’s unlikely that lenders will dial up that risk level too quickly going forward given that many are still dealing with working through a lengthy and messy foreclosure process on risky loans from the last loose lending spree."
