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Just when you think the housing market is recovering, here comes the reminder: The foreclosure crisis is far from over.
Lenders started the foreclosure process on more than 311,000 properties in the second quarter of this year, according to a report by RealtyTrac. That’s an increase of 9 percent compared to the first three months of the year, and it's about 6 percent more foreclosure starts than what was reported in the second quarter of 2011.
Overall, there were fewer foreclosures filed in June than in May, the report says.
But foreclosure activity increased significantly in several states during the first half of this year, compared to the first half of 2011. These states experienced the biggest jump in foreclosures during this period.
States with the greatest increase in foreclosures
- Indiana: up 32 percent.
- Pennsylvania: up 24 percent.
- South Carolina: up 23 percent.
- Connecticut: up 23 percent.
- Florida: up 23 percent.
- Illinois: up 22 percent.
Here are the top 10 states for foreclosures in June.
Why the sudden increase? Many major lenders were forced to hit the pause button on foreclosures when they were caught in the robosigning scandal and while they were busy negotiating the $25 billion national mortgage settlement with regulators. Now, they've hit play again and are processing many of the delinquent loans that were not yet in foreclosure.
"Lenders and servicers are slowly but surely catching up with the backlog of delinquent loans that under normal circumstances would have started the foreclosure process last year," says Brandon Moore, CEO of RealtyTrac. "The increases in foreclosure starts in the first half of the year will likely translate into more short sales and bank repossessions in the second half of the year and into next year."
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