Foreclosure starts continue to fall in Nevada, the West

Foreclosure starts continued to decline in Nevada and other Western states in April, offsetting small gains in new foreclosure filings from the previous month, ForeclosureRadar.com listing service reported Tuesday.

In Clark County, notice of default filings – the initial step in the foreclosure process – fell nearly 30 percent in April to 962, foreclosure sales declined 21.9 percent to 400, and time to foreclose increased 6.7 percent to 431 days.

In California, default filings are down 69.8 percent from the peak in March 2009 and down 15.8 percent from April 2011.

Foreclosure sales also declined. However, investors purchased a record percentage of the limited inventory that was actually sold. Nevada investors purchased 50.7 percent of foreclosure sales, followed by Arizona with 44.6 percent and California at 41.3 percent.

The low number of sales, combined with record purchases on the courthouse steps, left few to become bank- or real estate-owned. This further depletes the inventory as REO sales continue to outpace the addition of new inventory, said Sean O’Toole, chief executive officer of Discovery Bay, Calif.-based ForeclosureRadar.

Despite investors purchasing a higher percentage of foreclosure sales, margins have rapidly declined in recent months, he said. In both Arizona and Nevada, winning bids on average equal the current estimated value of those properties.

This leaves resale investors looking at record low profits after paying for evictions, repairs and closing costs.

Realtor Bryan Lebo said investors are “out in force” trying to cash in for top dollar while the market presents a short window of opportunity. Lebo said in October, after passage of the robo-signing law, that the market would be nearly depleted of inventory by March.

At the end of April, he showed 4,407 homes available for sale without an offer, including just 605 REOs and 1,428 short sales.

Preforeclosure inventory – or properties that have had a notice of default filed but have not yet been scheduled for trustee sale – declined to 25,449 in April, down from 36,876 in the same month a year ago, according to ForeclosureRadar.

“Sadly, the indefinite future does look bleak. We’re looking at a year before normality,” Lebo said.

O’Toole said California has pending legislation similar to Nevada’s robo-signing law, which requires lenders to provide authority to foreclosure before filing a notice of default. If passed, it will likely slow foreclosure activity there, he said.

“Foreclosure declines would be wonderful news if they were being driven by a true market recovery in which hundreds of thousands (of homeowners) were no longer unable to make payments, and millions were no longer upside down,” O’Toole said. “That is not the reality today.”

Contact reporter Hubble Smith at hsmith@
reviewjournal.com or 702-383-0491.