U.S. foreclosure filings in November totaled 262,339, a 21% decrease from the previous month and a 14% decrease from November 2009.

Part of the monthly decrease can be attributed to a seasonal drop of 7% to 10% that typically occurs in November because fewer foreclosures are pursued during the holidays.

But the declines are largely being linked to fallout from the robo-signing scandal - which involved reports of improperly signed foreclosure documents submitted by lenders and servicers. The scandal led to self-imposed foreclosure stoppages.

"The foreclosure robo-signing controversy forced lenders and servicers to hit the pause button on many foreclosures while they scrambled to revamp their internal procedures and revise or resubmit questionable paperwork," says James J. Saccacio, chief executive officer at RealtyTrac, an online marketplace for foreclosure properties.
In other words, do not expect the decline to last.

In 2011, the number of foreclosures is likely to increase, says Rick Sharga, a senior vice president at RealtyTrac, an online marketplace for foreclosure properties.

While the market is expected to tally about 1.2 million bank repossessions in 2010, up from 900,000 in 2009, Sharga believes 2011 will top both of those numbers. 

Ongoing high unemployment numbers likely will worsen the foreclosure problem next year, as will looming interest-rate resets on adjustable rate mortgages.

The problems the mortgage industry has experienced with foreclosure processing that started this fall, and delayed many foreclosures from being completed this year, also might lead to larger totals.
In the meantime, data on the volume of loan modifications from the Treasury Department indicate that fewer borrowers were being approved for permanent modifications in recent months, says Greg Hebner, chief executive of MOS Group, a loss-mitigation service provider to mortgage lenders and servicers.

What's more, there's a growing feeling that modifying mortgages does not get to the heart of the housing crisis: "There is the perception that the answer to this involves trying to get job growth," which will help homeowners pay their loans and enable others to buy homes, said Jay Brinkmann, chief economist for the Mortgage Bankers Association, during a recent conference call with reporters.

For the longer term, however, the outlook for the foreclosure market is better since fewer homeowners are becoming delinquent on their mortgage payments. Thirty-day delinquencies are down 11% since the height of the recession in the first part of 2009, according to Brinkmann.

And loans 60 or more days past due are expected to fall nearly 20% by the end of 2011, to about 5% of all mortgages from an expected 6.2% at the end of 2010, according to a forecast released by credit-reporting company TransUnion. Delinquency numbers are expected to continue to improve as unemployment slowly declines. For its numbers, TransUnion uses a random sample of 27 million records from its database.

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