Bank Repos Hit Record of 102,134 in September (RealtyTrac, Sharga Interview)

According to RealtyTrac, banks repossessed a record number of 102,134 homes in September. During the third quarter, bank repossessions (bank-owned foreclosures or Real Estate Owned/REOs) hit a record of 288,345 (+7% from Q2 2010, +22% from Q3 2009), foreclosure auctions scheduled hit a record of 372,445 (+5% from Q2 2010, +4% from Q3 2009) and default notices declined to 269,647 (-1% from Q2 2010, -21% from Q3 2009). Read the press release for data on total foreclosure filings (defaults, scheduled auctions and bank repossessions), foreclosure sales and foreclosure rates by state. Below is a quote from RealtyTrac's CEO, James Saccacio, and an interview with Senior VP Rick Sharga on Tech Ticker.
“Lenders foreclosed on a record number of properties in September and in the third quarter, taking a bite out of the backlog of distressed properties where the foreclosure process was delayed by foreclosure prevention efforts over the past 20 months,” said James J. Saccacio, chief executive officer of RealtyTrac. “We expect to see a dip in those bank repossessions — and possibly earlier stages of the foreclosure process — in the fourth quarter as several major lenders have halted foreclosure sales in some states while they review irregularities in foreclosure-processing documentation that has been called into question in recent weeks.”

“If the lenders can resolve the documentation issue quickly, then we would expect the temporary lull in foreclosure activity to be followed by a parallel spike in activity as many of the delayed foreclosures move forward in the foreclosure process,” Saccacio said. “However, if the documentation issue cannot be quickly resolved and expands to more lenders we could see a chilling effect on the overall housing market as sales of pre-foreclosure and foreclosed properties, which account for nearly one-third of all sales, dry up and the shadow inventory of distressed properties grows — causing more uncertainty about home prices.” [Full Release]

Some notes from what Rick Sharga said on Tech Ticker

*Housing market is still in critical condition
*Housing is being propped by Government intervention
*96% of all loans are backstopped by Fannie, Freddie, FHA
*Lenders/loan services are managing the number of distressed inventory coming to market
*Pipeline of about 600,000 bank properties that have yet to come to market
*1.2 million people in foreclosure
*5 million seriously delinquent on their loans; 60 days+ past due
*flat housing market for at least the next 2.5 years; end of 2013 (assuming no shocks)
*there could be another 3-5% decline in home prices nationally


Tech Ticker interviewed Whitney Tilson at the Value Investment Congress on 10/14/2010.