Moratoriums Slow Foreclosures, For Now

Filings fell in January, but defaults continue to rise, suggesting it's only a temporary lull.

As the Obama administration continues to hammer out details of its grand scheme to combat the next tsunami of foreclosures, the number of homes repossessed by lenders ebbed a bit in January.
The lull was thanks largely to a recently expired ban on such seizures at government-controlled mortgage giants Freddie Mac (nyse: FRE - news - people ) and Fannie Mae (nyse: FNM - news - people ).

Foreclosure filings--including default notices, auction sale notices and bank repossessions--fell 10% to 274,399 in January from the month before, while bank repossessions declined by a much larger 15%, according to a report released Thursday by Irvine, Calif.-based foreclosure data firm RealtyTrac. This indicates that a larger number of distressed borrowers are in the foreclosure process, but fewer lenders are actually taking properties back.
"Whatever drop-off we've seen month-over-month can be attributed to moratoriums at Fannie and Freddie and a similar 45-day ban by the state of Florida," said RealtyTrac Vice President Rick Sharga. And while the number of notices of default were an improvement from December's surge, "They are still the fourth highest we’ve seen since 2005 when we started tracking."

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