Foreclosure filings drop as officials raise questions over process
Friday, February 11, 2011
The uproar over faulty paperwork in mortgages is putting the brakes on the nation's foreclosure system.
The number of foreclosure filings nationwide fell to about 260,000 last month, 17 percent lower than in January 2010.
In areas where judges, law enforcement and other officials have taken aggressive actions against faulty foreclosures, the drop was even sharper.
In Maryland, where Wells Fargo and Ally Financial last month dismissed pending foreclosures because they were approved by a "robo-signer," foreclosures fell by 70 percent from last January. In Massachusetts, where the state supreme court in January invalidated some foreclosures and called into question many others, there was a 66 percent fall.
In Florida, where law enforcement officials are considering criminal charges in foreclosure cases, there was a 54 percent decline. And in Virginia, where the legislature is considering a bill that would make it harder for banks to foreclose by doubling the notice period, there was a 42 percent fall.
January was also the third straight month in which the number of foreclosure filings fell under 300,000. The trend comes after filings reached above 300,000 for 20 straight months, according to a report released Thursday by Irvine, Calif.-based RealtyTrac.
On a month-to-month basis, foreclosure activity nationwide inched up 1 percent from December to January.
Much of the slowdown is likely only temporary, a sign that lenders "have become bogged down in reviewing procedures, resubmitting paperwork and formulating legal arguments related to accusations of improper foreclosure processing," James J. Saccacio, chief executive of RealtyTrac, explained in a statement.
The number of foreclosure filings began to drop last fall after large mortgage servicers such as Bank of America, J.P. Morgan Chase and Ally put some foreclosures on hold after admitting that some of them had been improperly prepared.
The companies said that some employees had become robo-signers, signing off on foreclosures without properly reviewing the underlying paperwork. The scandal has led to investigations by the federal government and by 50 state attorneys general.