U.S. foreclosure activity increased 2% in May, even as the recovery in many local housing markets is showing gains, online marketplace RealtyTrac said.
Foreclosure activity, which includes default notices, scheduled auctions and bank repossessions, involved 148,054 properties in May, the firm said Thursday. Bank repossessions from April to May rose in 33 states and rose 11% nationwide. But repossessions were still 29% below the level of May 2012.
The numbers show one in every 885 U.S. housing units were involved in some level of foreclosure activity in the month. But the gain is coming off of April's 75-month low, RealtyTrac said.
"Foreclosure activity continued to bounce back in some markets where it may have appeared the foreclosure problem had been knocked out by an aggressive combination of foreclosure prevention efforts over the past two years," said Daren Blomquist, vice president at RealtyTrac. "Still, the emerging housing recovery has strengthened most local markets enough to quickly shake off a few more blows from these nagging foreclosures."
Five major U.S. lenders last year agreed to a multibillion-dollar settlement over the use of so-called foreclosure mills that had allegedly cheated homeowners of due process as the banks tried to rush through foreclosure cases that piled up during the economic downturn.
RealtyTrac said in May all four out of five of the lenders involved in the settlement reported an increase in repossessions. The exception was Citigroup.
"It could be a sign of a trend we're expecting, which is that eventually, the banks are going to pull the trigger and complete these distressed loans that have been sitting in limbo for some time," Blomquist said.
Five of the six top foreclosure rates were in Florida, Ohio, Maryland, South Carolina and Illinois - states that require a judicial review to complete a foreclosure. The exception among the top six was Nevada, which had the second highest foreclosure rate in the month of May.
Places like Nevada, where foreclosure starts increased to a 20-month high, and Maryland, where overall foreclosure activity increased to a 33-month high. Still, the emerging housing recovery has strengthened most local markets enough to quickly shake off a few more blows from these nagging foreclosures," Blomquist said.