REO Volume Plummets; Homes Now Sell At 20% Discount

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Foreclosure activity continues to fall nationwide.

Foreclosures Fall To A 40-Month Low

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 are lower. Total filings are down more than 1/3 from April 2010.

It Now Takes 400 Days To Foreclose

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 — more than double the 151-Day average of early-2007.

Another reason that foreclosures are falling is that job growth is returning. Job creation in the economy is associated with fewer home loan defaults.

5 States Account For 50% Of Foreclosures

Despite falling volume, foreclosures continue to concentrate among just a few states. 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.

Foreclosures Sell At A 20% Discount

For home buyers and seasoned investors, the foreclosure market has proved wonderful. Data from the National Association of REALTORS® says foreclosures sell at a steep, 20 percent discount relative to non-distressed homes. There’s bargains to be had — you just need to know where to find them.

There’s an excellent foreclosure website for scouting homes, or you can call your real estate agent. Then, when you need your foreclosure-specific pre-approval letter, call or .

I do short sales, REOs and I finance homes for investors with more than 4 mortgages.

(This post adapted from Bring the Blog, a blog-writing service for loan officers)