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October Foreclosures Down as Banks Halt Filings
The number of foreclosures dropped significantly in October, but not because fewer homeowners are delinquent on their payments, but because the market is reacting to voluntary moratoriums on seizures by several of the nation's top lenders.
According to RaltyTrac's report released on Thursday, all types of foreclosure filings, including auction notices, auction sale notices, and notices of default are down 4.4 percent during the month. Bank repossessions, meanwhile, the type of filing directly impacted my the moratoriums, plummeted by 8.7 percent.
The voluntary foreclosure freezes were enacted because of recent revelations that a number of loan servicers had processed foreclosure paperwork improperly. Banks pushed back auctions of foreclosed properties to ensure that all the necessary paperwork was in order. A RealtyTrac spokesman said that the numbers would have been considerably higher if not for the recent concerns over the foreclosure process.
The principal concern over lenders' foreclosure practices is the use of so-called robo-signers, employees who routinely push through scores of foreclosure documents daily without properly verifying their contents, as required by law. October's drop in seizures comes on the heels of sizable increases in four of the previous six months, capped off by an all-time high of 102,000 seizures in September. October seizures came in at 93,246.
Analysts say the effects of the moratoriums will bleed into November, as they were not fully felt in October's report. But true improvement in foreclosures will likely not occur for many months as most lenders still have large backlogs of borrowers behind on payments that have yet to be served even a singly default notice, and thus are not included in RealtyTrac's data.
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