Homes in foreclosure rose year-over-year in May for the first time in 27 months as banks resumed dealing with distressed properties after a mortgage abuse settlement earlier this year, according to a report released by data firm RealtyTrac on Thursday.
Default or scheduled-home-auction notices were filed for the first time against 109,051 homes last month. Nationwide, filings jumped 9 percent in May but remain 4 percent lower than a year earlier. That marks 20 consecutive months of year-over-year declines.
Foreclosure starts, however, increased on an annual basis for the first time in more than two years.
The $25 billion settlement between major banks and states was widely expected to fuel foreclosure proceedings that were previously stalled by uncertainty about the liability of banks.
"Lenders are starting to catch up with the delayed foreclosures of the past year and a half," said Daren Blomquist, a vice president at RealtyTrac.
Some 33 states saw annual increases in homes entering the foreclosure process last month, with New Jersey, Pennsylvania and Florida posting the biggest gains.
Many of the homes now entering the foreclosure process could end up repossessed by banks. Going by the last five years, it could be as many as half.
Bank repossessions increased 7 percent after sinking to a 49-month low in April, with 54,844 homes repossessed in May.
"That the May numbers were up the month after that settlement was completed is an indication that lenders are more confident that there are clear ground rules to foreclose now, so they can play by the rules," Blomquist added.
