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Local foreclosures at lowest in 5 years

But foreclosures still may not have bottomed out in area, experts say.

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By Ken McCall and Tim Tresslar
Staff Writers Updated 7:46 AM Tuesday, October 18, 2011

Foreclosure activity in the Dayton area hit a five-year low in September, but real estate observers can’t say for sure if the housing crisis has turned a corner.

The latest report by RealtyTrac Inc. showed that the number of properties in the four-county metropolitan statistical area involved in some phase of foreclosure fell to 368 last month — about a third of the 1,048 filings in September 2010.

“The last time we had fewer than that in the Dayton area was July 2006,” said RealtyTrac spokesman Darren Blumquist. “So that’s a 62-month low. That’s pretty crazy.”

But, Blumquist said, the Dayton metro area — Montgomery, Greene, Miami and Preble counties — may not be turning the corner.

RealtyTrac experts believe the dropoff, which is nationwide, is due mostly to paperwork problems lenders had to resolve after the so-called robosigning scandal that peaked in October 2010.

Several large banks temporarily halted foreclosures a year ago, after admitting that some employees had been signing thousands of foreclosure documents without verifying the information.

For the 20 months prior to the robosigning scandal, foreclosure filings nationwide averaged almost 335,000 a month. In the 11 months beginning last November, the nation has averaged a bit under 233,000 — a 30 percent drop.

In the Dayton metro area, the filings went from a 20-month average of 927 properties a month through last October, to 694 a month after — a 25 percent drop.

The September dropoff, however, is even more dramatic — down almost half from the 702 filings in August.

Nobody has a good explanation for that.

Foreclosure lawsuits filed by lenders in Montgomery County, meanwhile, have fallen in recent months, according to statistics from the Montgomery County Clerk of Court’s website.

In September, 362 foreclosure cases were filed, compared to 421 cases in September 2010, a 14 percent decline. Filings in August fell 11 percent compared with the same month in 2010 and year-over-year results were flat in July.

Despite the dropoff, the county’s numbers remain high, said Gregory Brush, Montgomery County clerk of courts

As of Monday, nearly 3,200 foreclosure cases — mostly residential, but also commercial — had been filed in Montgomery County Common Pleas Court this year, he said.

“That’s a lot,” Brush said. “That still sucks. But, again, it’s not where we’ve been before this time of year when we had almost 4,000.”

Brush said he questions whether problems with flawed paperwork at major banks remain a drag on foreclosure activity.

Beth Deutscher, executive director of the HomeOwnership Center of Greater Dayton, said her agency continues to see a steady flow of people seeking help. But she attributes that at least in part to the center’s role as the entry point for the Hardest Hit Program, which helps borrowers who have fallen behind on their payments because they lost their jobs.

But, she said, lenders probably have pulled back on foreclosures because they were ending up with too many properties or because of high-profile scandals over faulty paperwork.

“In some cases, they are evaluating more carefully whether to take ownership of the house,” Deutscher said. “While I think it’s a good sign, I think we need time to evaluate the numbers before we get too optimistic.”

Another factor in the decrease is that the federal Hardest Hit program finally got going and has helped 3,500 homeowners so far this year, said Bill Faith, executive director of the Columbus-based Coalition on Homelessness and Housing in Ohio.

“That’s definitely helped, but I don’t think we’re out of the woods or anything,” Faith said. “It’s more that they (lending institutions) slowed down, and more people are getting help that we’ve seen in recent years. So the combination is really helping.”

Still, Faith said, reports by the Mortgage Banker’s Association show that there are a lot of properties that are seriously delinquent — 90 days or more behind in payments.

“And those are sort of the foreclosure pipeline,” he said.

Michael Royce, a real estate broker who focuses on distressed properties, said fewer foreclosed properties are coming into the market, though lenders are expected to release more in the near future.

And that’s the rub, said RealtyTrac’s Blumquist. Eventually, all those delayed foreclosures are going to happen.

“I think it’s good news for homeowners who are in distress because they’re getting extra time to maybe figure out how to avoid foreclosure,” Blumquist said. “But it’s probably not good news in the long run, because we believe on these delayed foreclosures that the lenders are eventually going to push those through and complete the foreclosure.”

The only possible silver lining for the Dayton area, he said, is that the numbers show that foreclosure activity in the Dayton area may have already been declining before the robosigning scandal hit.

“That would put Dayton that much closer to getting through the foreclosure problem than other parts of the country,” Blumquist said.

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