Foreclosure rate slows but analysts remain skeptical

The number of homeowners who were put on notice for defaulting on their mortgage payments dropped last month to the lowest level since 2006, RealtyTrac reports.

Meanwhile, foreclosure filings for the eighth straight month also were down as filings fell 33 percent in May compared to a year earlier and 2 percent month-over-month. Also, lenders took back fewer homes in May, the second straight month of declines. And bank repossessions were down in May too – down nearly 30 percent over the last 12 months.

According to some analysts, lingering delays in banks’ foreclosure process may be the reason for the declining numbers.
“Foreclosure processing delays continue to mask the true face of the foreclosure situation,” says James Saccacio, CEO of RealtyTrac, a company that follows foreclosures and defaults. “Lenders are somewhat unevenly pushing batches of bad loans through foreclosure as they overhaul their paperwork and documentation procedures.”

Overall, banks hold two million homes in some stage of foreclosure. Banks are on track to repossess about 200,000 fewer homes this year than in 2010. The projection is for 800,000 this year compared to one million last year.