Improvement, however, does not mean the level of distressed housing is back to normal; not by a long shot. There continues to be a wide discrepancy between states that require a judge in the foreclosure process and those that do not.
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Nine states saw foreclosure activity rise in the first half of 2014 compared with a year ago, according to RealtyTrac. They include judicial states such as New Jersey (up 54 percent), Maryland (up 18 percent), Massachusetts (up 4 percent) and Connecticut (up 4 percent). Florida, also a judicial foreclosure state, had the highest rate, with one in 74 housing units receiving some kind of foreclosure filing.
“There continue to be concerning trends in some states and local markets that clearly indicate those markets are not completely out of the woods when it comes to the lingering foreclosure problem left over from the housing bust,” Blomquist said.
On the other hand, “Foreclosures are no longer a widespread contagion threatening to derail the housing market’s return to full health,” he said.
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There are still between 1.5 million and 2 million seriously delinquent loans, most of which were issued before 2009 and will end up in foreclosure. Rather than all of these properties going back to the banks, however, many could now be sold at foreclosure auctions.
“During the peak of the crisis, there were almost no foreclosure sales at these auctions—lenders repossessed almost all of these distressed properties,” said Rick Sharga of Auction.com, a real estate auction site.
“But we’ve seen an increase in foreclosure sales over the past year, beginning in the nonjudicial states, and now moving into some of the judicial foreclosure states as well. Rising home prices help lenders reduce losses on these sales, and selling at the auction also removes the effort and expense of doing evictions and repairing and maintaining the property after the foreclosure.”