* Default notices jump 33 pct in Aug-RealtyTrac
* Total foreclosure filings rise, but REOs fall
NEW YORK, Sept 15 Default notices on U.S. home
loans notched their biggest monthly increase in four years in
August, suggesting some of the backlog from documentation
issues was easing, data showed on Thursday.
First-time default notices were filed on 78,880 homes last
month, marking a nine-month high, according to a report by
RealtyTrac. Notices jumped 33 percent from July, the biggest
increase since August 2007.
The rise in default filings did not necessarily suggest
that a new foreclosure problem was on the horizon but that some
of the glut of homes needing to be processed was being reduced,
said Rick Sharga, senior vice president at RealtyTrac.
Foreclosure activity was halted temporarily late last year
due to claims that lenders relied on "robo-signing" in which
documents were signed without reviewing the case files.
"There are probably about 3.5 million loans that should be
in foreclosure but aren't yet, and we're going to have to work
through that inventory before the housing market can come
back," said Sharga. "This is a painful but necessary first step
to get the housing market back on a more even keel."
Even though negotiations between banks and state attorneys
general over foreclosure practices still are not resolved,
some banks did restart foreclosure actions after an April
settlement with a number of federal regulators.
JPMorgan Chase & Co (JPM.N), for example, as of the end of
June had resumed foreclosure steps in nearly all of the 43
states where it had suspended its actions.
So-called "shadow inventory," or the looming foreclosures
that are still expected to hit the market, is a major overhang
for a housing sector that is already struggling with a glut of
Still, default notices were down 18 percent from August
last year and were down 44 percent from the monthly peak
reached in April 2009 during the tail end of the recession.
Total foreclosure filings -- which include default notices,
scheduled auctions and repossessions -- were sent to 228,098
homes, a 7 percent increase from July but down 33 percent from
Bank repossessions fell 4 percent to a six-month low of
64,813 homes. Repossessions have come down 37 percent from the
peak of 102,134 hit in September 2010.
Nevada once again had the highest state foreclosure rate
with one in every 118 homes receiving a foreclosure filing in
August. Nevada has held the top spot for over four years.
Even so, Nevada saw a 3 percent decrease in filings as
scheduled auctions and bank seizures eased.
(Reporting by Leah Schnurr, additional reporting by David
Henry; Editing by Diane Craft)