It could take a lot more government prodding and pushing, but there are signs that the housing market is nearly done collapsing and may now start treading recessionary waters. Both RealtyRac and ForeclosureS.com report a sharp decline in month-over-month foreclosures in January. RealtyTrac, which measures default notices, auction sale notices and bank repossessions, reported a 10 percent decrease from December 2008. Completed foreclosures declined 25.7 percent in January, according to ForeclosureS.com, and pre-foreclosure filings fell 12 percent.

“The freeze in foreclosures by Fannie Mae, Freddie Mac, and other institutions, and spreading adaptation of the FDIC’s loan modification plan accounts for most of the dip,” says Alexis McGee, president of ForeclosureS.com. With the modifications, “a lot fewer homeowners are being forced through the foreclosure process—their loans are not ending up as a trustee’s deed,” McGee notes. “Lenders are becoming more accommodating, giving borrowers more rope.” Recidivism is expected: “The point is not to have them [foreclosures] hit all at one time.”

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