WASHINGTON The number of homes taken over by banks topped 100,000 for the first time in September, though foreclosures are expected to slow in coming months as lenders work through questionable paperwork, real estate data company RealtyTrac said on Thursday.
Banks foreclosed on 102,134 properties in September, the first single month above the century mark, RealtyTrac said. There were 347,420 total foreclosure filings in September, 3 percent higher than August and 1 percent higher than a year earlier.
"We expect to see a dip in those bank repossessions -- and possibly earlier stages of the foreclosure process -- in the fourth quarter as several major lenders have halted foreclosure sales in some states while they review irregularities in foreclosure-processing documentation that has been called into question in recent weeks," said James J. Saccacio, chief executive officer of RealtyTrac.
On Wednesday, all 50 states launched a joint investigation of the mortgage industry after widespread reports of mortgage industry officials signing foreclosure documents without knowing their contents.
For the quarter, there were 930,437 foreclosure filings, an increase of 4 percent over the prior three months and 1 percent lower than a year ago. One in every 139 homes received a foreclosure filing in the third quarter.
The firm said foreclosures could spike after a brief lull if lenders are able to quickly resolve the paperwork questions.
"However, if the documentation issue cannot be quickly resolved and expands to more lenders we could see a chilling effect on the overall housing market as sales of pre-foreclosure and foreclosed properties, which account for nearly one-third of all sales, dry up and the shadow inventory of distressed properties grows - causing more uncertainty about home prices," Saccacio said.
Nevada posted the highest foreclosure rate for the 45th straight month, followed by Arizona, Florida, California and Idaho.
In 2005, before the housing bust, banks took over just about 100,000 houses, according to the Irvine, California-based company.
(Reporting by Corbett B. Daly; Editing by Andrew Hay)