By Ian McKendry

WASHINGTON (MNI) – While foreclosure activity appears to be on the
decline as much of the rubble left from the housing bust has been
cleared, certain states are still experiencing higher foreclosure rates
and others may experience periodic spikes as foreclosure prevention
tactics that slowed the process in the past come to fruition, RealtyTrac
said.

RealtyTrac, an online marketplace for foreclosure properties
Thursday, reported that in the third quarter foreclosure activity
declined in two-thirds of the largest metro areas with a couple large
metro areas in California reporting double digit declines.

However, the metro areas of New York, Tampa, Philadelphia, Chicago
and Seattle posted double digit increases.

Daren Blomquist, vice president at RealtyTrac, attributed much of
the increases in these areas to lenders catching up as Florida,
Illinois, New York, New Jersey and Pennsylvania use a judicial
foreclosure process which requires court intervention and takes longer
than a non-judicial foreclosure process which is used in most of the
U.S.

“Because of the longer foreclosure process in those states, some of
the foreclosures have been delayed and some of the foreclosures we are
seeing now in other states — those foreclosures would have happened in
2011 or even 2010 so it is just a matter of the slower foreclosure
process,” Blomquist told MNI.

“This is not a sign of those markets tanking in terms of new
homeowners going into foreclosure, this is more the lenders are cleaning
up the leftovers of the housing bust,” Blomquist said.

While the narrative of higher foreclosures in states that take
longer to foreclose is not new, it was peculiar to see Seattle, which is
in a state that uses a non-judicial foreclosure, process on a list with
cities in states that use a judicial process.

“It could actually be a pattern we see develop in some of the other
non-judicial states,” Blomquist said.

In 2011 the state of Washington passed a law that allowed borrowers
to go to mediation before they were foreclosed upon.

Blomquist said the result was a dropoff in foreclosure activity for
about 12-months and now foreclosure activity is starting to pick up
again.

“Similar story, we are seeing lenders playing catchup,” Blomquist
said.

Washington was not the only non-judicial state to pass a law to
curtail foreclosures.

California passed a home owners bill of rights which bans certain
practices like dual tracking during the foreclosure process and starting
in 2013 lenders will be more explicitly susceptible to lawsuits.

Dual tracking allows a lender to move forward with a mortgage
modification while simultaneously going through the foreclosure process.

Blomquist noted that other Western states like Nevada and Oregon
also passed similar laws.

“We are seeing now the consequences of how different markets dealt
with foreclosures last year and two years ago” Blomquist said.

** MNI Washington Bureau: 202-371-2121 **

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