Reprint of Fannie Mae Release on Ohio Foreclosures

This is a re-print of an email Fannie Mae sent to their network of Real Estate Brokerages in Ohio.  We would have provided a link to the information, but have not been able to locate it on the internet.  Although the Youngstown/Warren metro area was not specifically mentioned, we will experience a surge in additional foreclosures here in the months ahead.

RealtyTrac helped us compile a list of the metro areas where a rebound in foreclosure activity could put a damper on home prices… again.
The data is broken down by Metropolitan Statistical Areas, which are localities defined by the U.S. Office of Budget and Management that usually contain a city and its neighboring suburbs.

We combed through RealtyTrac’s data for more than 200 MSAs, considering a variety of factors including the number of both preforeclosures and REOs (bank-owned homes) relative to market size, the number of months of supply of shadow inventory in each market, and the change in the local foreclosure rate from May 2011 through May 2012. We also looked at the percentage that distressed sales have contributed to total sales activity in each market and how much of a discount that those distressed properties have been selling at.

All of the metro areas that made this list have 20 months or more worth of foreclosure inventory; are witnessing 20% increases or higher in foreclosure activity; clocked May foreclosure rates that were above the national average; and have housing markets for which 10% or more of all home sales are distressed.

“A lot of the big increases are in areas typically not thought of as hot spots of foreclosure activity,” explains Blomquist. “It’s the judicial states that have the biggest increases now,” he says, referring to states where foreclosures are processed through the court system.
Blame the robo-signing scandal for the new flood of foreclosures in those states. It caused lenders to hit the pause button on millions of defaulted home loans, delaying the foreclosure process and in some cases halting it altogether. This was especially true in states where defaults must go through the courts, the so-called judicial states. The resulting delays caused an artificial decline in foreclosures, establishing a shadow inventory of roughly 2 million distressed properties that have yet to come to market. In Florida, for example, it took a whopping 806 days (the national average was 348) for a lender to foreclose on a home at the end of 2011.

Since a $25 billion foreclosure settlement was reached earlier this year, filings have finally begun to move through the system again in the most delayed areas, creating a new wave of foreclosures. So while foreclosures in hard-hit states where the process is less rigorous — like California, Nevada and Arizona — have actually been decreasing, judicial states like Florida, Ohio and Pennsylvania, are facing an onslaught of new filings.

In Ohio, four metro areas are seeing marked upticks in activity: Dayton, Cleveland, Canton and Columbus. In Dayton, new filings have increased 92% and represent a 30-month inventory. These properties, which constituted 21% of May’s home sales, typically fetch 36% less than comparable non-distressed homes. In Cleveland, new filings increased 42% from May 2011 through May 2012, representing a 31-month inventory.

This is a re-print of an email Fannie Mae sent to their network of Real Estate Brokerages in Ohio.  We would have provided a link to the information, but have not been able to locate it on the internet.