Bank repossessions of distressed homes hit a 30-month high in July, as financial institutions continue to work through the backlog of bubble-era loans.
Bank real estate-owned properties spiked 81% in July compared with a year earlier, to 46,957 homes, the highest level since January 2013, according to a new report from Irvine, Calif.-based analytics firm RealtyTrac.
The surge in REO properties may provide much-needed housing inventory and offset rising home prices, said Daren Blomquist, a vice president at RealtyTrac. That could further increase demand and help facilitate bank sales of their remaining properties.
"Banks are clearing out the lingering backlog of the toughest foreclosure cases, the ones that had some problems," Blomquist said. "They're getting to the bottom of the barrel."
REO properties in July increased in 44 states, rising 472% in New York, 344% in New Jersey and 187% in Texas compared with a year earlier, RealtyTrac found. The biggest increases came in states where foreclosures are processed through the courts.
Meanwhile, foreclosure filings rose 14% in July from a year earlier, the fifth consecutive monthly increase. Foreclosure filings, which include default notices, scheduled auctions and bank repossessions, had notched more than four years of consecutive decreases before rising again this year due to the surge in REOs.
Roughly 60% of loans still in the foreclosure process were originated from 2004 to 2008, down from 68% last year and 75% in 2013, the report found. Despite fewer foreclosure starts, 13 of the top 20 metro areas posted higher foreclosure activity in July, RealtyTrac found. Miami, Tampa and Baltimore had the highest foreclosure rates in July.
There were nearly as many foreclosures started in July as bank repossessions. Foreclosure starts in July fell 9% to 45,381 properties, the lowest level since November 2005 - a nearly 10-year low, the firm found. States that are bucking the trend with increasing foreclosures starts include Massachusetts, up 130%, New Jersey, up 76%, and Missouri, up 72%, RealtyTrac found.