Foreclosures drop in region as lenders slow process

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Percentage of January home foreclosures | Source: RealtyTrac

Foreclosures fell steeply in Hampton Roads last month as banks and lenders pulled back on repossessing and auctioning off homes, according to a report to be released today.

The number of foreclosures fell to 755 in January, down 25 percent from December and nearly 30 percent from the 1,072 reported a year earlier, according to RealtyTrac, a foreclosure-monitoring service based in Irvine, Calif.

It was the second time since RealtyTrac began collecting foreclosure data in 2005 that the number of foreclosures in Hampton Roads has declined year-over-year, suggesting that the problem might be easing.

However, a local economist and national real estate expert said something else may be behind the drop. Several of the country's largest mortgage companies have suspended or slowed foreclosure proceedings in recent months.

"This is less a sign of a robust housing recovery and more a sign that lenders have become bogged down in reviewing procedures, resubmitting paperwork and formulating legal arguments related to accusations of improper foreclosure processing," said James J. Saccacio, RealtyTrac's CEO, in a news release.

Greg Grootendorst, chief economist at the Hampton Roads Planning District Commission, agreed.

"As we've seen in the past, there are months where decisions made by the banks have really impacted what we've seen as far as foreclosures," he said.

Across the country, foreclosure activity rose slightly from December but was down 17 percent from January 2010.

Foreclosures fell in all the major Hampton Roads cities for the month except Norfolk and Suffolk. Both of those cities also showed an increase in foreclosures from the previous year. Foreclosures were most widespread last month in Suffolk.

"I think we're still going to see a foreclosure problem ahead of us," Grootendorst said. "If we see an uptick in employment and jobs, that will certainly decrease the number of foreclosures going forward."

Adjustable rate mortgages also pose a threat to the region's housing recovery, he said, because many are scheduled to be reset this year, which could result in higher mortgage payments for some homeowners.

Local housing counselors haven't seen less demand for foreclosure-prevention counseling.

John Allen, who is in charge of the foreclosure-prevention services at The Up Center, said the nonprofit has a back log of two weeks on appointments with struggling homeowners.

Josh Brown, (757) 446-2318, josh.brown@pilotonline.com