Foreclosure starts jump as lenders clear up backlogs
Foreclosures initiated by lenders jumped again in July as financial firms continued to work through a backlog that accumulated last year while new laws and regulations were finalized, according to a Boston real estate tracking firm.
Lenders started 702 foreclosures in July, a 72.5 percent increase from the same month a year earlier,, the Warren Group reported Tuesday. Year-over-year, foreclosure starts have increased for five consecutive months. Through the first seven months of the year, they are up 20.2 percent from the same period in 2013.
Cassidy Murphy, editorial director of the Warren Group, the publisher of the trade journal Banker & Tradesman, said the jump in foreclosure starts doesn’t indicate a return to the problems of several years ago, but rather lenders resuming actions that they delayed last year while waiting for new rules to be clarified.
“Lenders are more comfortable moving forward with foreclosures from a legal standpoint,” said Murphy.
Economic conditions also suggest that the jump in foreclosures is mostly procedural. The economy, both in Massachusetts and nationally, is adding jobs and unemployment is falling. Home values are rising.
The number of completed foreclosures, meanwhile, fell sharply. Lenders completed 177 foreclosures, down 41 percent from the 298 filed in July 2013, the Warren Group said. Through the first seven months of 2014, completed foreclosures were down 17.3 percent from the same period a year earlier.
Not all foreclosures initiated by lenders are completed. Sometimes lenders and borrowers agree to new payment plans, other times the homes are sold before the process reaches its end.