Lenders took possession of fewer U.S. homes in 2012 than a year earlier, as the pace of new homes entering the path to foreclosure slowed and banks increasingly opted to allow troubled borrowers to sell their homes for less than what they owed on their mortgage.
All told, banks repossessed 671,251 homes last year, down nearly 17 percent from 804,423 the year before, according to data released Thursday by foreclosure-listing firm RealtyTrac.
The trend, along with an annual decline in overall foreclosure activity, suggest that the country’s foreclosure woes are easing, at least on a national level.
In Washington state, fewer households received some kind of foreclosure notice in 2012 than in any year since 2008. Foreclosure activity was down 18 percent in King County and 7 percent in Snohomish County from 2011.
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But half the states experienced higher levels of foreclosure activity last year and many are expected to continue seeing increases this year, RealtyTrac said.
Nationally, foreclosure activity, defined as the number of homes that received at least one foreclosure-related filing, declined 3 percent last year. That translates to 1.8 million U.S. homes, and represents a drop of 36 percent from a peak of 2.9 million homes in 2010, the firm said.
Florida had the nation’s highest foreclosure rate last year, with 3.1 percent of households, or one in 32, receiving a foreclosure-related filing during the year.
Washington ranked 19th, with one household in 95 receiving a filing. The rate was one in 100 in King County, one in 53 in Snohomish County and one in 50 in Pierce County.
But the three counties experienced a late-year surge in foreclosure activity, especially in the number of households receiving a notice of a foreclosure sale — the first step in the foreclosure process that is recorded publicly in Washington.
More than 2,200 households in the counties received such a notice in December, according to RealtyTrac, compared with just 431 in December 2011.
Generally, states such as Florida and New York, where the courts play a role in the foreclosure process, take longer to work through their cases than Washington, California, Utah and other so-called nonjudicial states with a more streamlined process.
The judicial states also have taken longer to work through a backlog of cases that built up in 2011 when foreclosure processing slowed as the mortgage industry addressed allegations that lenders had processed foreclosures without verifying documents.
As a result, foreclosure activity rose last year in 25 states, most of them states with a judicial foreclosure system, while it declined in 25 others, most of those being nonjudicial foreclosure states, RealtyTrac said.
Among the states with the biggest increases were New Jersey, Florida and Illinois.
Many of the states with a judicial foreclosure process, including Florida, Illinois, Ohio and Indiana, should be caught up with their foreclosure backlog halfway through this year, said Daren Blomquist, a vice president at RealtyTrac.
Other states, such as New York and New Jersey, where the foreclosure process can run an average of nearly three years, will continue to play catch-up through most of 2013, he added.
Blomquist expects foreclosure activity will decline in nonjudicial foreclosure states through the first half of the year.
But laws passed last year in California, Oregon and Nevada aimed at making it more difficult for lenders to foreclose on homeowners may end up deferring foreclosures in those states until later in the year.
“That could mean that, although we are comfortably past the peak of the foreclosure problem nationally, 2013 is likely to be bookended by two discrete jumps in foreclosure activity,” Blomquist said.
While foreclosure activity declined last year, the inventory of homes in some stage of foreclosure or in banks’ possession climbed 9 percent to 1.5 million homes, RealtyTrac said.
Florida accounted for the biggest share of foreclosure inventory last year, or 20 percent of the national total.
Blomquist forecasts that between 500,000 and 600,000 homes will end up being repossessed by banks nationally this year.
Last year, 1.1 million homes got started on the path to foreclosure.
Seattle Times business reporter Eric Pryne contributed the Washington state data in this report.