Foreclosures: Filings of Foreclosures Down But Could Jump Soon

Filings of foreclosures are down nearly 20 percent this January compared to one year ago, but foreclosure activity could jump soon as banks are bogged down by improper foreclosure filing accusations.

The number of foreclosure filings, which include bank repos, auctions, and notices for home defaults, was around 260,000 in January 2011, about a 17 percent year-on-year decrease, real estate tracker RealtyTrac reported last week.

“We’ve now seen three straight months with fewer than 300,000 properties receiving foreclosure filings, following 20 straight months where the total exceeded 300,000,” CEO of RealtyTrac James Saccacio said in a statement.

But economic analysts aren’t celebrating, because the dip in foreclosure activity could soon ramp up after banks sort out accusations of improper foreclosure paperwork that has frozen and halted foreclosure filings.

“Unfortunately this is less a sign of a robust housing recovery and more a sign that lenders have become bogged down in reviewing procedures, resubmitting paperwork and formulating legal arguments related to accusations of improper foreclosure processing,” Saccacio noted.

Foreclosure auctions saw their lowest level since February 2009, numbering only 108,000 last month.

Just 78,000 homeowners lost their houses to foreclosure in January, far off the 102,000 mark in September 2010, according to RealtyTrac and CNN Money.

Housing market insiders foreshadow a spike in foreclosure activity in the next few months, which means that a housing recovery could be postponed into later in the year.

"We expect a spike in the first quarter," Rick Sharga of RealtyTrac told CNN Money. "If we don't get that, it could mean that the foreclosures are being pushed back even more and that the time needed for recovery will be prolonged."