Still, the number of properties on which foreclosure action was begun rose in March, for the third consecutive month, RealtyTrac said.
Of the 50 states, Pennsylvania ranked 28th in the number of foreclosure filings, while New Jersey was 39th. Filings in Pennsylvania were 22 percent higher than in the first three months of 2011, while New Jersey filings were 37 percent lower.
For March, Pennsylvania ranked 32d in filings, while New Jersey was 35th.
In March, New Jersey was among the states with a large increase in foreclosure starts, 73 percent. RealtyTrac said the foreclosure process in New Jersey — from notice of default to bank repossession — would take an average of 966 days.
Observers cautioned against interpreting lower filing numbers nationwide as a sign that the reservoir of distressed properties that accumulated over the last five years had somehow evaporated.
“There are hairline cracks in the dam, evident in the sizable foreclosure-activity increases in judicial-foreclosure states over the past several months, along with an increase in foreclosure starts in many judicial and nonjudicial states in March,” said RealtyTrac CEO Brandon Moore.
“The dam may not burst in the next 30 to 45 days, but it will eventually burst, and everyone downstream should be prepared for that to happen — both in terms of new foreclosure activity and new short-sale activity,” he said.
Many have warned that initial foreclosure filings may be on the increase now that the nation’s attorneys general have finally settled with five major U.S. lenders over questionable processing procedures.
Negotiations for a settlement over what is known as “robo-signing” — signing documents for legal action without reading them first — resulted in a number of lengthy moratoriums on new foreclosure proceedings by lenders. The delays also helped lenders avoid adding more bank-repossessed housing to a saturated market, easing downward pressure on median sale prices for several months.
With the foreclosure tap reopened, economists are predicting that median prices will decline an additional 5 percent to 10 percent before stabilizing in the second half of this year.
Yet plans by the government to turn many bank repossessions in the hardest-hit areas into rental properties could help stabilize prices by keeping lower-cost houses off the market.
CoreLogic, a real-estate-data provider based in Santa Ana, Calif., said Wednesday that the single-family rental market was strong and vibrant, with high and stable rents, low supply, and a healthy pace of signed rental leasings.
“The potential size of the rental market for REOs this year, and annually over the next few years, is over $100 billion,” said senior economist Sam Khater.
Many continue to advocate principal write-downs as the way to make it easier for troubled borrowers to keep current on mortgage payments.
But Edward DeMarco, acting director of the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, reiterated Tuesday his opposition to write-downs, saying that such reductions are not “some huge difference-making program that will rescue the housing market” and that they carry costs with many unintended consequences.
American Bankers Association president Frank Keating concurred, saying, “A broad principal-reduction program would result in fewer investors who are willing to lend for housing finance, increased borrowing costs, and tighter credit availability.”
Contact Alan J. Heavens at 215-854-2472 or aheavens@phillynews.com, or follow on Twitter @alheavens.
