After reigning for 22 months as the nation’s No. 1 spot for foreclosures, Las Vegas has just been kicked all the way down to the No. 5 position.
Is this cause for hope? Is Sin City, which has lost more than 100,000 homes to foreclosure in the last four years, about to see its housing market stabilize at long last?
Not exactly. According to RealtyTrac, the nation’s leading tracker of foreclosure properties, this drop to No. 5 is temporary, caused by a new Nevada regulation that requires mortgage servicers to provide an affidavit showing the mortgage balance due, verification of title and who has the authority to foreclose. The law is designed to prevent mortgage servicers or trustees from making false representations concerning a title.
But apparently the law also is slowing down the process enough to take away Vegas’ foreclosure crown. At least for now. RealtyTrac fully expects it to regain its top spot as soon as lenders work through the red tape in the new reporting process.
Las Vegas home prices have dropped about 9% in the last year, and almost 60% from their peak of five years ago. Some market watchers estimate that another 100,000 homes could be lost to foreclosure in Nevada over the next four years.
So which were the top 10 foreclosure markets in October? A list just released by RealtyTrac shows the following:
- Stockton, Calif.
- Modesto, Calif.
- Vallejo-Fairchild, Calif.
- Riverside-San Bernardino, Calif.
- Las Vegas, Nev.
- Saginaw, Mich.
- Sacramento, Calif.
- Cape Coral-Ft. Myers, Fla.
- Merced, Calif.
- Orlando, Fla
It’s no surprise that California has a claim on six of the top 10 spots. Areas such as Stockton and Modesto have been kicking around in the top 10 for many months now, and the relatively high default rates in those markets are unlikely to shrink significantly any time soon.
Nationwide, more than 230,600 foreclosures were filed in October, and while this is down a remarkable 31% from October 2010, it represents a 7% increase from the previous month. RealtyTrac attributes the large year-over-year drop to the discovery last autumn of a large number of “robo-signings” — in which bank employees signed off on foreclosure proceedings without reviewing each case — which banks to temporarily halt foreclosures.