LOS ANGELES — Lenders stepped up action last month against homeowners who had fallen behind on their mortgage payments, taking possession of more homes and initiating the foreclosure countdown clock on many others, and Nevada ranked high among states for foreclosure activity.
Completed foreclosures jumped 11 percent nationally in May from the previous month, with monthly increases taking place in 33 states, foreclosure listing firm RealtyTrac Inc. said Thursday.
Florida led the nation last month with an overall foreclosure rate nearly three times the national average. Nevada and Ohio rounded out the top three.
The monthly rise reflects a rise in homes entering the foreclosure process last year. Many of those homes wound their way through the often lengthy process and ended up becoming bank-owned properties. Home repossessions, however, were down 29 percent from May last year, reflecting the long-term downward trend.
Banks also started the foreclosure process on more homes last month. Foreclosure starts rose 4 percent from April, but were down 33 percent versus May last year, the firm said.
Banks are more willing to move to the final stage of foreclosure because there is sufficient demand and prices are improving, said Eric Workman of Tinley Park, Ill.-based Mack Cos., which aggregates single-family rental homes and resells them to individuals and institutional investors.
“For a very long period of time, the market in general and specifically banks were unsure of what these assets were valued at,” Workman, vice president of sales and marketing at Mack, told Bloomberg News. “With increasing stability of the economy and housing prices throughout the U.S., these banks and sellers are getting much more comfortable with the value of their properties.”
The increases come as the U.S. housing market continues to gain strength, propelled in part by growing demand for homes at a time when there’s a thin supply of available homes for sale in many markets.
That dynamic has helped push home prices higher. They climbed nationally on an annual basis by 12.1 percent in April, the biggest gain since February 2006, according to data provider CoreLogic.
The combination of a tight inventory of homes for sale and rising prices makes for an opportune market for banks.
“Home prices are rising and demand is stronger, so they can recoup more of their losses when selling a bank-owned home, and in most cases should be able to sell relatively quickly,” said Daren Blomquist, a vice president at RealtyTrac.
The prospect of more bank-owned homes hitting the market also is good news for homebuyers struggling with the short supply of available homes. But not so great for homeowners, Blomquist said.
“For homeowners who are current or own their homes outright, this could slow down the recent rapid rise in home price appreciation, which could mean the value of their home does not go up as quickly in the short term,” he said.
A Nevada Realtor also noted that banks now have an incentive.
“Given the shortage of inventory and rising home prices, banks have little motivation to hold back on any foreclosures, so homeowners who have not been making payments for several months or even years without a foreclosure notice should expect to see that notice coming,” Craig King, an agent at the Reno-based Chase International brokerage, said in RealtyTrac’s report.
That’s an unwelcome development, particularly for homeowners who are underwater on their mortgage, or owe more than their home is worth.
As of the end of March, 19.8 percent of all U.S. homes with a mortgage were underwater, according to data provider CoreLogic. However, in Las Vegas, an estimated 54.3 percent of homeowners were underwater in the first quarter.
Rising home prices have helped drive that number down from 21.7 percent at the end of last year, and returned roughly 850,000 homes to a state of positive equity in the first three months of this year.
All told, 38,946 homes were taken back by lenders last month. Repossessions increased on a monthly basis in 33 states, including North Carolina, Oregon and Wisconsin.
At the current pace, the nation is on track to finish the year with about a half million completed foreclosures, down from 670,000 last year, Blomquist said.
Foreclosure starts totaled 72,698 homes. They increased on a monthly basis in 26 states and rose on an annual basis in 14 states, including Maryland, Connecticut, Hawaii and Arkansas.
Bloomberg News contributed to this report.