Foreclosure filings are jumping in areas where judges had delayed foreclosures because of robo-signing allegations, according to a report released Thursday by RealtyTrac, which markets foreclosed properties. The report includes data from 212 metro areas.
The robo-signing scandal, which broke in October 2010 (see story) and involved lenders using suspect legal documents, slowed things down dramatically in states where judges are involved in the foreclosure process.
"Long-dormant foreclosures are coming out of hibernation in many local markets," said Brandon Moore, RealtyTrac's CEO.
In states such as Florida, lenders were hesitant to bring foreclosures in front of judges who might find the paperwork suspect. Now, in the state, virtually all cities reported jumps in filings in the first quarter. In Miami, filings went up 37%, year-over-year. In Orlando, it was 52% and Palm Bay it was 148%.
Miami reported about 58,000 filings in the quarter before the scandal broke, according to RealtyTrac spokesperson Daren Blomquist. That dropped to 19,000 in the first quarter of 2011. The current level is about 26,000.
The impact of the robo-signing scandal on the pace of foreclosures was dramatic. Most Florida cities came close to a dead stop starting in late 2010.
California was less affected by the robo-signing scandal and filings remained steady throughout. Foreclosures are in the hands of title insurance companies in that state and other trustees give foreclosure paperwork less scrutiny than courts do.
Since foreclosures didn't slow as much in California, cases were flushed out of the system. So its cities reported year-over-year declines in the first quarter.
Now that the $26 billion robo-signing settlement is in place, banks should be more free to pursue foreclosures again. Look for them to pick up over the next few months, according to Blomquist.