Metro Detroit foreclosure activity fell for the 22nd consecutive month in August, according to a report released Thursday, with the region’s strong home sales helping to discourage potential foreclosure growth.
The number of default notices, sheriff’s auctions and lender repossessions dropped 37 percent in August from a year ago, according to RealtyTrac, an Irvine, Calif.-based company. The August decrease was steeper than July’s 23 percent fall.
Home sales in Livingston, Macomb, Oakland and Wayne counties have increased 12 of the past 13 months through July, according to Realcomp II Ltd., a Farmington Hills multiple listing service.
Home prices have risen for 12 straight months, as well, according to the Standard & Poor’s/Case-Shiller index.
“The stronger demand from buyers in the Detroit market is helping more of the potential foreclosures in Detroit be diverted to short sales,” said Daren Blomquist, a RealtyTrac vice president, referring to the practice of lenders letting homes be sold for less than the mortgage owed.
“Banks are much more aggressive in promoting and approving short sales than they have in the past rather than go through the increasingly lengthy and messy foreclosure process,” Blomquist said in an email.
The foreclosure filing drops were strongest in the state’s two wealthiest counties. Livingston County experienced a plunge of 67 percent, while Oakland County saw a 44 percent reduction.
Michigan’s foreclosure activity fell 41 percent compared with a 15 percent contraction nationwide, according to RealtyTrac.
But Metro Detroit’s high concentration of underwater mortgages — where the amount owed is more than the house is worth — continues to pose “a lot of latent risk” for the Detroit housing market, Blomquist said.
RealtyTrac said 60 percent of Wayne County homes this month are upside down, compared with 48 percent in Oakland County and 47 percent in Macomb County.
But a Wednesday report by Santa Ana, Calif.-based CoreLogic found that underwater mortgages as a share of all homes in the Detroit-Livonia-Dearborn area fell to 43.1 percent in the second quarter from 45.9 percent in the first quarter.
“Surging home prices this spring and summer, lower levels of inventory and declining (lender repossession) sale shares are all contributing to the nascent housing recovery and declining negative equity,” CoreLogic Chief Economist Mark Fleming said in a statement.
The Detroit News