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Foreclosure activity rises in May, Ohio hit hard

The wheels of the foreclosure process appear to be rolling again. Slightly more than 109,000 first-time foreclosure notices were sent out to American homeowners last month. Nationwide, that is a 12 percent increase from the numbers tracked in April, and a 16 percent jump from the number of first-time foreclosure notices recorded in May 2011.

The recent new wave of first-time foreclosure notices seems to have hit Ohio homeowners relatively hard. RealtyTrac, Inc., the company that announced the numbers last Thursday, says that Ohio ranked number seven in the country for first-time foreclosure notices in May, which--on a national scale--is generally consistent with the population of Ohio.

Butler County saw the highest activity in Ohio, with one in every 291 homes in the county receiving some kind of foreclosure notice. RealtyTrac says that 510 homeowners in Butler County received some form of foreclosure notice, including default notices, notices of scheduled auctions and bank repossessions in May. Nearly half of the Butler County homes, specifically 250 of them, involved the scheduling of the home for public auction.

The May numbers could show a new trend in the wake of the recent foreclosure crisis settlement. Some real estate industry watchers say that many banks waited to begin new foreclosures until the government and the country's financial institutions could hammer out the details of the settlement.

Many financial institutions that hold home mortgages let the held off on proceeding with foreclosure during the settlement process. Now that the state and federal authorities reached the foreclosure settlement, industry commentators say that the lenders have a clearer picture on how to proceed with home mortgage foreclosures.

A spokesman for RealtyTrac says that the $25 billion foreclosure settlement has allowed for the process to reignite. He says, "Lenders appear to be slowly releasing a backlog of bank-owned properties into the market." A spokesman for the Ohio Bankers League recently told the Middletown Journal that the foreclosure settlement "got the process working again within the banks." He believes that banks are now getting "distressed properties off their books."

Many cases that involve a property ordered for foreclosure auction eventually have the auction cancelled or withdrawn. In some cases, the property owner may reach an agreement with the lender staving off the foreclosure. Different routes may lead to a cancellation or withdrawal of a scheduled auction. Filing for bankruptcy is one option.

Some homeowners choose to proceed with a short sale prior to foreclosure, and negotiate a deal with the bank to allow the short sale.

A Butler County spokesperson says that there is now discernable pattern to withdrawals. He says, "They're withdrawn for various reasons. It might be short sale, bankruptcy, they're trying to work something out with the parties, a half dozen different reasons."

Sources:

  • Middletown Journal, "Butler County tops again in state in foreclosures," Chelsey Levingston and Eric Schwartzberg, June 14, 2012
  • Washington Post, "More US homes entered foreclosure process in May, paving way for short sales, repossessions," Associated Press, June 13, 2012

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