Foreclosure auctions hit record as document crisis unfolds

By Charles Riley, staff reporterOctober 14, 2010: 12:45 PM ET

NEW YORK (CNNMoney.com) -- Bank repossessions and foreclosure auctions hit record levels in the third quarter, RealtyTrac said on Thursday.

372,445 foreclosure auctions were scheduled in July, August and September, while 288,345 properties were repossessed by lenders over the same time period.

Overall foreclosure filings edged up to 930,437 in the third quarter, a 4% increase from the previous quarter. One in every 139 homeowners received a foreclosure filing during those three months.

Bank repossessions, or REOs, also are on the rise. In September, a record 102,134 homes were taken back by banks. It's the first time repos have topped 100,000 in a single month.

The uptick is not expected to last, RealtyTrac CEO James Saccacio said in a statement, because several major loan servicers have halted foreclosure sales pending a review of documents.

Nevada had the nation's highest foreclosure rate, up 1% from earlier, for the 15th quarter in a row. One in every 29 Nevada homes received a foreclosure filing during the third quarter.

Looking at total numbers of foreclosures, neighboring California was worst, with 191,016, followed by Florida, Arizona, Illinois and Michigan. Combined, the five states accounted for half of all foreclosures last quarter.

On Wednesday, 50 state attorneys general into improper foreclosures performed by the nation's largest loan servicers but stopped short of calling for a nationwide freeze.

At least six major loan servicers are reviewing procedures or documents to determine whether shortcuts may have jeopardized the accuracy of foreclosure proceedings.

It remains unclear to what degree the foreclosure process will slow as a result.

If lenders resolve the document issues quickly, there will be a brief stop-and-go period before the market resumes normal function, Saccacio predicted.

But if the review expands to more lenders, Saccacio said, "We could see a chilling effect on the overall housing market." 

#cnnfb_connect {background-color:#f5f5f5;width:auto;height:auto;padding:10px;clear:both;} First Published: October 14, 2010: 3:50 AM ETRight Now

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