Foreclosures maintained a high level of activity in February even as low mortgage rates made it easier for borrowers to refinance into more affordable monthly payments.
According to a recent report from RealtyTrac, there were an estimated 206,900 properties in some stage of the foreclosure process last month. This includes mortgage default notices, foreclosure auctions and bank repossessions. However, despite the significant number, it was a 2 percent decrease from the previous month and an 8 percent dip from February 2012.
"February's numbers point to a gradually rising foreclosure tide as some of the barriers that have been holding back foreclosures are removed," said RealtyTrac CEO Brandon Moore. "Although national foreclosure activity was pushed lower by decreases in a handful of larger states, 21 states posted annual increases in foreclosure activity, the most states with annual increases since November 2010."
Meanwhile, the report noted there was a significant difference in rates between states that practice judicial foreclosures versus those who have non-judicial practices.
February foreclosure activity in judicial foreclosure states rose 2 percent from the previous month, while surging 24 percent from a year earlier. In contrast, states with a non-judicial foreclosure process saw activity fall 5 percent from January and 23 percent from February 2011.
However, in the wake of the recent $25 billion settlement reached between the nation's largest mortgage lenders and state attorneys general on behalf of borrowers who were wrongfully foreclosed upon, activity is expected to increase during the course of 2012.
"The foreclosure and mortgage settlement filed in court earlier this week will help pave the way to a properly functioning foreclosure process by providing a clear roadmap for necessary foreclosures," Moore added. "That should result in more states posting annual increases in the coming months."
On a local level, 10 of the nation's 20 largest metropolitan areas in terms of population saw annual increases in foreclosure activity. This uptick was led by the Florida cities of Tampa Bay and Miami, where activity rose 64 and 53 percent, respectively.
Meanwhile, the report found that Arizona, California and Nevada still led the nation as being the states with the most foreclosure filings during the month. Despite hitting a 58-month low, Nevada still retained the top spot for the 62nd consecutive month. One in every 278 Nevada homes were reported to be in some stage of the foreclosure process.
Additionally, there were a total of 48,422 foreclosures in California during the course of the month, giving it the spot for the second highest foreclosure rate, while one in every 312 Arizona properties were in foreclosure.
The high level of foreclosures could have been caused by a slowdown in refinancing activity. According to the Mortgage Bankers Association's most recent Weekly Application Survey, there was less refinancing activity during the week ending March 9 – marking four consecutive weeks of declines.
The report found that refinancing accounted for a 75.1 percent share of total applications, down from 77 percent the previous week. This is the lowest the share has been since November 2011. However, in contrast, there was an uptick in purchase activity.
"Applications for home purchase increased again last week, coinciding with another strong job market report," said MBA vice president of research and economics Michael Fratantoni. "Purchase applications are now almost 12 percent above the level one month ago, even after adjusting for typical seasonal patterns."