The U.S. housing market appears to be shedding the last vestiges of the subprime mortgage crisis. As foreclosures reached their lowest level in nearly 10 years, home repossessions hit a 30-month high in July 2015, according to real-estate website RealtyTrac.
There were 45,381 U.S. properties that were put into foreclosure for the first time in July, down 8% from the previous month and 9% from a year ago, the lowest since November 2005, while banks repossessed 46,957 properties in July, up 29% from the previous month and 81% from a year ago, hitting the highest level since January 2013. (Foreclosure refers to the process your lender goes through if you stop making payments on your home or go into default. Repossession is when the lender takes ownership of your home. This can’t occur until a foreclosure is final.)
A decade-low in foreclosure activity shows that a recent surge in bank repossessions represents “banks flushing out old distress rather than new distress being pushed into the pipeline,” says Daren Blomquist, vice president at RealtyTrac. “Properties that foreclosed in the second quarter had been in the foreclosure process an average of 629 days, the longest in any quarter since we began tracking in the first quarter of 2007,” he said. Some 61% of loans in the foreclosure process originated during the housing bubble between 2004 and 2008. That number was 75% two years ago.