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US Foreclosures Drop 27 Percent

California-based housing research firm RealtyTrac reported Thursday that foreclosures across the US fell 27 percent in 2011's first three months as compared with the first quarter a year ago, fueling optimism about the recovery in the nation's long-struggling housing market.  A total of 681,000 homes received some type of foreclosure-related filing in the quarter, or one in every 191 households, the report showed.

Of those, 215,046 homes were seized, RealtyTrac said, down 17 percent on a year-to-year basis.  The positive data is contradictory to other recent housing data, as recent reports show weakness in new home sales and prices still falling.  Even as foreclosure numbers hit their lowest level in three years, other data seems to indicate the recovery has a long way to go.  Analysts explain that the reason for this contradiction is that foreclosure numbers have been artificially deflated by the well-documented robo-signing scandal, as banks have cut back on seizures until they can clean up their procedures.

According to Rick Sharga, a spokesman for RealtyTrac, foreclosure filings would have been around 900,000 in the first quarter without the cutback, and 280,000 to 300,000 seizures instead of just 215,000.  Even though fewer homes have been seized, lenders are still unwilling to modify loans to help borrowers hang on to them.  According to Hope Now, a collection of loan servicers, community groups and mortgage investors working to stem the foreclosure tide, reported last week that its members had modified 87,000 home loans in February, down significantly from the 110,000 loans modified in December.

The decrease in foreclosure filings, meanwhile, was fairly broad-based, RealtyTrac's data showed, falling in every one of the 20 metro areas hit hardest by the foreclosure crisis.  The Cape Coral, Florida area saw the biggest decline, 59 percent.  Nevada, Arizona, and California, meanwhile, continue to rank highest in foreclosure rates, but Florida, which ranked fourth at the height of the crisis, has fallen to eighth.  Las Vegas continued to have the highest foreclosure rate among metro areas, with one in 31 homes receiving a filing last quarter.