Number of Foreclosures Down in August

According to a recent report from CoreLogic, a leading business services and analytics firm, the number of U.S. foreclosures fell dramatically in August. The report stated that 57,000 foreclosures were completed, down from 75,000 in August 2011. Although the decrease was not as significant on a month-to-month basis (there were 58,000 completed foreclosures in the U.S. in July 2012) the year-over-year drop signals a more definitive improvement.

In a press release dated October 2, 2012, chief economist for CoreLogic stated that the month of August marked "the fourth month in a row there were fewer completed foreclosures." Fleming went on to say that this data provides more evidence that "the housing industry is finding its footing."

The CoreLogic report found that the five states with the lowest foreclosure inventory as a percentage of all mortgaged homes were Wyoming (0.5 percent), Alaska (0.8 percent), North Dakota (0.8 percent), Nebraska (0.9 percent) and South Dakota (1.1 percent). 

The five states with the highest percentage of foreclosures were Florida (11.0 percent), New Jersey (6.5 percent), New York (5.2 percent), Illinois (4.8 percent) and Nevada (4.6 percent).

The October press release suggested that the improvement in U.S. foreclosures reflects a gradual "clearing out" of shadow inventory across the nation. The president and CEO of CoreLogic, Anand Nallathambi, was quoted as saying the following:

"The reduction in foreclosure volumes is to some degree being facilitated by the rising popularity of alternative resolution methods, such as short sales and loan modifications."

In short sales, a lender agrees to accept less than the home's value, in the hopes that the property will change hands and avoid foreclosure. In the event of a short sale, the homeowner is not necessarily "off the hook" when it comes to repaying the loan deficiency; however, it can be a mutually beneficial alternative to the home being foreclosed. 

With loan modifications, one or more of the terms in the borrower's loan is permanently changed, resulting (hopefully) in a mortgage payment that the borrower can afford. As an example, the Home Affordable Modification Program (HAMP) is a government project that allows eligible homeowners to lower their monthly mortgage payments to 31% (or lower) of their pre-tax income. 

Many homeowners are also able to avoid foreclosure through a traditional refinance mortgage program. The availability of extremely low mortgage rates has allowed many borrowers to lower their monthly mortgage payments to a more manageable level.

Whether through short sales or loan modification programs, more and more Americans are finding valuable alternatives to foreclosure. Thankfully, there are also several helpful resources available to proactively combat the threat of foreclosure. The U.S. Department of Housing and Urban Development (HUD) offers access to approved housing counselors throughout the United Sates. 

Foreclosure resources from the HUD: 

http://www.hud.gov/offices/hsg/sfh/hcc/fc/

http://portal.hud.gov/hudportal/HUD?src=/topics/avoiding_foreclosure