Foreclosure Filings Fall To 40-Month Low

Foreclosure activity continues to drop nationwide.

Based on data from foreclosure-tracking firm RealtyTrac, foreclosure filings nationwide fell below 220,000 in April 2011, a 9 percent decrease from March.

A "foreclosure filing" is defined as any foreclosure-related action including Notice of Default, Scheduled Auction, or Bank Repossession.

April marks the seventh straight month in which foreclosure filings have dropped and total filings are down more than one-third year-over-year.

One reason why filings are down is that banks are letting more time pass between delinquency and foreclosure, exploring alternative courses of actions such as short sales and loan modifications. It now takes, on average, 400 days from an initial default notice to bank repossession.

That's more than double the 151-day average of early-2007.

Another reason may be that job growth is returning to the U.S. and job creation is associated with fewer home loan defaults.

Regardless, in the states in which foreclosures are occurring, bank repossessions are concentrating among just a few. 

5 states accounted for half of the country's April REO:

• California : 19.8 percent
• Arizona : 9.5 percent
• Michigan : 7.5 percent
• Florida : 6.7 percent
• Texas : 5.6 percent

Collectively, these 5 states represent just 32 percent of the nation's population.

On the other end of the chart, Vermont accounted for a measly 0.007% of April's foreclosure filings.

If you're a first-time home buyer considering foreclosed homes , or a seasoned investor adding to your portfolio, the good news is that foreclosures are selling at steep, 20 percent discounts relative to non-distressed homes. Just make you know what you're buying. Foreclosure purchases carry different risks and follow different procedures than "traditional" sales.

Rely on a seasoned real estate agent to navigate the deal.

Bank Reposessions Top 100,000 In A Month For The First Time Ever

The number of foreclosure filings rose 3 percent in September, according to foreclosure-tracking firm RealtyTrac. The term "foreclosure filing" is a catch-all word for housing, comprising default notices, scheduled auctions, and bank repossessions.

September marked the 19th straight month that the number of filings topped 300,000, and the first month in which 100,000 repossessions were logged.

As usual, a small number of states dominated the national foreclosure figures, accounting for more than half of all repossessions.

1. California : 17% of all repossessions
2. Florida : 13% of all repossessions
3. Michigan : 7% of all repossessions
4. Arizona : 7% of all repossessions
5. Texas : 5% of all repossessions
6. Georgia : 5% of all repossessions

Thankfully for home sellers, mortgage servicers appear to be metering the pace at these newly bank-owned homes are made available to the public. RealtyTrac notes that, in doing so, servicers prevent "the further erosion of home prices".

That said, distressed properties still sell at a steep discount.

In the second quarter of 2010, the average sale price of homes in the foreclosure process was 26 percent lower than the average sale price of homes not in the foreclosure process. It's no surprise, therefore, that, based on RealtyTrac's preliminary data, 31 percent of all homes sold in September were "distressed".

There's lot of good deals out there, in other words, but they come with certain risks.

Buying a foreclosed home is not the same as buying a non-foreclosed home. Specifically, you're buying from a corporation and not from a "person". Contracts may vary, and so may terms.

Therefore, Hayward home buyers -- even experienced ones -- should talk with a real estate agent before making an offer. It's important to understand the foreclosure-buying process.