National foreclosure trends took a positive turn in April, as the number of homes seized by banks declined and fewer properties entered into the foreclosure process.
But state-level data point to potentially more home repossessions ahead in Florida and many of the 25 other states where courts are required to sign off on foreclosures.
All told, the number of U.S. homes taken back by lenders in April declined 7 percent from March, the third consecutive monthly decline, foreclosure listing firm RealtyTrac Inc. said Thursday. Home repossessions fell 26 percent versus April last year.
The number of homes that lenders placed on the foreclosure path last month also declined, falling 4 percent from March and 2 percent from April 2011, the firm said.
While the figures suggest foreclosure trends are improving nationally, state data tell a different story.
"You absolutely have a tale of two different types of foreclosure trends happening across the country," said Daren Blomquist, a vice president at RealtyTrac.
The divide comes down roughly between the 26 states where courts play a role in the foreclosure process and places like California and the other 23 states where the process generally moves quicker because judges are not required to sign off on foreclosures.
Last year, foreclosure activity, as measured by the number of homes receiving foreclosure-related notices, slowed sharply as lenders grappled with allegations that they had been processing foreclosures without verifying documents.
A $25 billion settlement reached in February between the nation's biggest mortgage lenders and state officials has since cleared the way for banks to take action on unpaid mortgages.
In California, Arizona, Nevada and many other so-called non-judicial foreclosure states, foreclosure activity has been declining because they didn't build a huge backlog of pending foreclosure cases last year.
In contrast, the slower foreclosure process in states like Florida, New Jersey and Pennsylvania helped build a logjam of pending foreclosure cases that now has lenders playing catch-up.
As a result, foreclosure activity in all the judicial foreclosure states combined jumped 15 percent versus April last year. Taken together, non-judicial states saw foreclosure activity fall 29 percent, RealtyTrac said.
While 27 states recorded increases in the number of homes entering the foreclosure process last month, it appears the properties represent largely homes where borrowers missed payments for two or three years, and lenders are now getting around to taking action against them.
"The good news there, is we don't see a lot of evidence that there are a lot of new people who are just not making their payments who are entering foreclosure," Blomquist said.
The Mortgage Bankers Association reported on Wednesday that the percentage of mortgages that were one payment past due as of March 31 declined to the lowest level since mid-2007. While the share of home loans that were at least three months past due at the end of the first quarter fell to the lowest level since the end of 2008.
Home loans taken out at the peak of the housing boom continue to comprise the majority of problem loans. In the first quarter, some 60 percent of all mortgages past due 90 days or more, or in foreclosure, were originated between 2005 and 2007, the MBA said.
Meanwhile, banks are increasingly agreeing to short sales rather than foreclosing on homes. In a short sale, the bank agrees to accept less than what the seller owes on their mortgage.
In the first three months of this year, short sales grew while foreclosures declined. Short sales are now on pace to outnumber sales of bank-owned homes in California, Arizona and 10 other states, RealtyTrac said.
That could help slow the pace of home repossessions, which are on pace to be just over 700,000 this year. Last year, about 1 million homes ended up foreclosed-upon.
All told, foreclosure-related notices were reported on 188,780 U.S. properties last month, the lowest monthly total since July 2007, RealtyTrac said. That's a decline of 5 percent from March and down 14 percent from April last year.
Lenders took back 51,415 homes and began the foreclosure process on 97,665 homes last month.