Real estate data tracking firm RealtyTrac reported Thursday that the majority of the nation's largest metropolitan areas are experiencing a drop in foreclosure activity as banks slow their procedures amid ongoing fallout from the foreclosure crisis. In 2011's first six months, 84% of metropolitan areas with at least 200,000 people experienced a year-to-year drop in foreclosure rate. In addition to home seizures, RealtyTrac also tracks notices of default and scheduled home auctions, which sometimes lead to foreclosures.
In all, 178 of the nation's largest 211 biggest metro areas saw a drop in foreclosures during the first half of the year. The majority of the reason foreclosures have fallen is delays in the foreclosure process as lenders continue to rework their procedures as a result of the improper procedures reported late last year. The ongoing investigations have forced lenders to resubmit paperwork on thousands of foreclosures.
Lenders have also become more open to loan modifications and other measures designed to avoid foreclosure because they are already inundated with homes they've seizes and can't sell. When banks sit empty for months in a bank's portfolio, they are responsible for upkeep costs and taxes, so they prefer to try to work with the homeowners to help them stay in the homes. According to another real estate tracking firm, CoreLogic, as many as 1.7 million potential foreclosures are being held up by lenders at the moment.
States where courts are involved in the foreclosure have experienced larger slowdowns in seizures as the amount of paperwork that needs to be resubmitted is more substantial. In fact, the top 20 metro areas in terms of foreclosure declines were all in states that require a judge's approval for foreclosures. Syracuse, New York saw the biggest foreclosure drop, a decline of 78% on a year-to-year basis. The city also had the third lowest overall foreclosure rate out of the 211 metro areas in RealtyTrac's report.