Foreclosure Rate Drops in October Following Robo-Signing Controversy
Nov. 11, 2010— -- After foreclosures hit a record high in September, the number of properties seized dipped below six figures for the month of October, and the number of properties that received foreclosure notices also declined slightly.
Lenders took back 93,236 housing units in October, a nine percent drop from the previous month's level.
In addition, though the number of properties that received a notice of default, auction or repossession topped 300,000 for the 20th consecutive month, hitting 332,172 October, the online foreclosure tracking firm RealtyTrac reported that filings decreased by 4 percent from the previous month.
"The numbers probably would have been higher except for the fallout from the recent 'robo-signing' controversy -- which is the most likely reason for the 9 percent monthly drop in REOs [real estate owned by banks after foreclosure] we saw from September to October, and which may result in further decreases in November," said RealtyTrac CEO James J. Saccacio.
Because of that controversy, don't expect the decline across some states to be permanent. After banks finish examining questionable paperwork and documents, the number of foreclosure filings likely will rise again.
"The press by the lenders to foreclose is going to find them alleging that the paperwork is fine," said Richard Kahn, author of "Winning Against Foreclosure," "and it's going to come down in foreclosure to the judge and the borrower and the attorney.
"It's the judges in foreclosure who are judges and jury," Kahn said. "Courts have to take documentation that is submitted to them as true unless proven otherwise. That's why it's important in every case to have a borrower and their attorney come to that particular judge with evidence that shows that, indeed, the documentation is false in that case."
Last month, attorney generals in all 50 states began an investigation into reports that sloppiness or deceit were contributing factors in the real estate crisis. The decision came after reports of robo-signing or foreclosures by rubber stamp began to surface in the office of some of the nation's largest mortgage lenders.
