Foreclosures surge across Western Pennsylvania as housing values rise
The numbers of homes facing foreclosure in Western Pennsylvania surged last month, despite an improving economy, as rising housing values and so-called “robo-signings” settlements apparently encouraged lenders to unload distressed properties.
The seven-county region last month had 898 homes in foreclosure — from mortgage default notices to bank repossessions — an 11 percent increase over the 808 in April and up about 41 percent from the 638 in May 2012, real estate information company Realty Trac reported Thursday.
The higher property values allow banks to lessen their losses from mortgages that have gone sour by selling the homes of defaulting borrowers.
“The housing market is good right now, and lenders realize this, so they want to unload their distressed properties in order to sell them to investors or themselves,” said Daren Blomquist, Realty Trac vice president.
Banks are clearing out a backlog of foreclosures that were put on hold as they worked out a settlement with states and the federal government over abusive practices.
“Now that settlements have happened, the banks and servicers find themselves doing business as usual,” said Dan Sullivan, foreclosure prevention specialist with Action-Housing Inc. of Pittsburgh. “They have been holding back in the past, waiting for the marketplace to shake out, and now that it has, they have again started sending out foreclosures.”
Pennsylvania was one of the states included in the multistate settlement with major lenders over the abusive foreclosure practices that resulted in millions of Americans being wrongfully foreclosed on during the housing crisis.
The banks settled regulators' complaints that they wrongfully foreclosed on borrowers with abuses such as “robo-signing,” or automatically signing off on foreclosures without properly reviewing documents.
Blomquist said foreclosures have been building in the Pittsburgh market during the past three months, with May seeing the largest activity by lenders. Homeowners in the Pittsburgh area received 421 notices of pending foreclosure sale last month compared with 315 in April and 250 in May 2012, according to the Realty Trac report.
In addition, banks repossessed 136 homes last month, slightly ahead of the 130 in April and the 131 a year ago May.
Nationally, foreclosure filings were up 2 percent in May from the 75-month low in April, RealtyTrac said. Filings were down 28 percent from a year ago. In May, foreclosure starts nationwide were up 4 percent from April but down 33 percent from a year earlier. Foreclosure starts mark the beginning of a process that can take years.
Despite the jump in activity in some markets, the housing recovery has strengthened most local markets enough to “quickly shake off a few more blows from these nagging foreclosures,” Blomquist said.
Nationwide, home prices were up 12.1 percent in April year-over-year, CoreLogic says.
Tight inventories of homes for sale in many markets are helping to drive the rapid increases, economists and real estate experts say.
However, there are signals that the inventory crunch has bottomed. Nationwide, the number of for-sale listings on Zillow was down 12 percent as of June 2 from a year ago. But that's less severe than the almost 18 percent shortfall recorded in January, Zillow said.
Sam Spatter is a staff writer for Trib Total Media. He can be reached at 412-320-7843 or firstname.lastname@example.org. USA Today contributed to this report.