Foreclosure activity increased 4% in the third quarter as bank repossessions hit a record high in September, according to RealtyTrac, which measures the foreclosure market.
Currently, one in every 139 U.S. housing units received a foreclosure filing during the quarter. Foreclosure filings were reported on 347,420 U.S. properties in September, an increase of nearly 3% over August and a 1% increase from September 2009.
Additionally, 102,134 bank repossessions were reported in September, marking the first time bank repossessions have surpassed the 100,000 mark in a single month.
However, RealtyTrac isn’t expecting this upward trend in foreclosure activity to continue as more banks halt their foreclosure filings.
“We assume we are going to see a drop in October as lenders halt foreclosure sales,” Rick Sharga, senior vice president of RealtyTrac, said.
Earlier this month, GMAC (the mortgage unit for Ally Financial), JPMorgan Chase (Stock Quote: JPM) and Bank of America (Stock Quote: BAC) all separately announced plans to freeze foreclosures in the 23 U.S. states where they must be approved by the courts as government officials raised concerns that the paperwork on these distressed properties was not being processed properly. PNC Financial Services Group (Stock Quote: PNC) suspended sales of foreclosed homes for 30 days.
According to Sharga, these delays will do more harm than good.
“If we were looking at delaying the process so that properties were escaping foreclosure, this would be a good thing,” Sharga says. “Unfortunately, these delays will have no effect on the outcome. These properties will still eventually enter foreclosure.”
Interestingly, Sharga said that RealtyTrac is expecting bank repossessions, the final stage a foreclosure filing, to see the biggest decline come next month as lenders have indicated they may continue to serve default notices and schedule auctions before stopping short of finalizing the foreclosure.