Foreclosure starts against homeowners in New Mexico continued at an elevated pace during the first three months of this year, although overall foreclosure activity continued a two-year decline, according to Irvine, Calif.-based RealtyTrac.
Foreclosure starts, signaled by notices sent to affected homeowners, hit an all-time high of 2,184 in the fourth quarter of 2011, and dipped by close to 11 percent to 1,951 in the first quarter. Despite the dip, the first quarter’s 1,951 starts is the second highest on record.
New Mexico’s elevated pace of starts reflects a trend in many of the 26 states that use courts to handle foreclosures, RealtyTrac said.
The trend is an indication that banks and other lenders have refined the way they process delinquent mortgages since the so-called “robo-signing” scandal of late 2010. Foreclosure activity stalled both here and nationwide during the first nine months of 2011 as a settlement of the scandal was negotiated.
A wave of foreclosure starts is expected later this year by RealtyTrac CEO Brandon Moore, who said in a prepared statement, “Everyone downstream should be prepared for that to happen, both in terms of foreclosure activity and short sales.”
Overall foreclosure activity, which includes foreclosure sales and bank repossessions, has been on a general decline both here and around the country since the peak in 2010.
In New Mexico, 2,531 homes were somewhere in the foreclosure process during the first quarter of this year, down from 2,895 in the first quarter of 2011, and 3,338 in the first quarter of 2010. Overall foreclosure activity in the state hit a high of 3,522 homes in the second quarter of 2010.
The decline in overall foreclosure activity results from the increased use of short sales, where the homeowner sells the home for less than what is owed on the mortgage and the lender typically writes off the difference.
Short sales have basically begun to replace the bank-sponsored foreclosure sales and bank repossessions common in 2010 and earlier, when banks and other lenders were reluctant to write off the financial loss incurred by short sales.
— This article appeared on page B1 of the Albuquerque Journal