New Report Shows and Increase in Foreclosure Starts for July

A new report from RealtyTrac was a mixed bag; while foreclosure activity decreased for the 22^nd consecutive month, there was an increase in foreclosure starts.

Default notices, scheduled auctions and repossessions declined by 3 percent over June of this year and 10 percent over July of 2011. During July, 191,925 home were involved in foreclosure actions.

However, foreclosure starts, homes just entering the process, increased by 6 percent in July with 104,000 homes nationwide receiving a default notice, the first stage of the foreclosure process. This is third month in a row that default notices have increased. But this increase is significantly lower than 2009, when 179,000 homes entered the process.

The uptick indicates that banks are trying to clear out their backlog following allegations that they used fraudulent documents or faulty practices to repossess millions of homes.

RealtyTrac also reported that bank repossessions also declined 21 percent in July over the same period last year. Banks are increasingly offering short sales, a foreclosure alternative in which banks agree to take less money for a property than they are owed.

Darren Bloomquist, vice president for RealtyTrac said, “Lenders are much less likely now than they were even a year ago or two years ago to repossess a property after they have started the foreclosure process,” according to NPR.

Homeowners and banks are more often seeking alternatives to foreclosure such as short sales, mortgage modifications or refinancing. When entering the process, a foreclosure attorney can help a homeowner determine which alternative they are eligible for opening up the possibility of keeping their homes.