Banks took an expected break from starting foreclosures in October, as a new state law governing home repossessions took effect.
Two local analysts said Wednesday that banks filed fewer than 200 notices of default in October. That is less than a tenth of the 3,700 notices they issued in September.
Dennis Smith, president and CEO of Home Builders Research, counted 174 first-time default filings in October. Tony Martin, director of data-crunching website LVDEFAULT.com, reported 194 notices of default.
Housing experts predicted the collapse in filings, given the Oct. 1 start of the Homeowners Bill of Rights.
The law put new limits on banks, including requirements that they give homeowners 30 days’ notice before starting foreclosure and advising owners on alternatives to default. Banks also have to follow specific timelines for paperwork and modification requests.
Notices of default surged the last few days of September, including nearly 1,500 filings the last two days of the month, as banks pushed filings through to beat the clock.
Despite their October stumble, notices of default came in higher than expected. They had fallen to two a day early in the month, on track for a monthly total of 60.
But Martin said activity picked up toward late October. And in the first five days of November, banks had already filed 58 notices.
He said that is an indication banks could find their way forward with the new law more quickly than observers initially expected, perhaps bouncing back to 2,000 or so monthly filings within four months instead of six months or more.
“The numbers tell me the banks were prepared for this. They were ready for it,” Martin said. “Come spring, I would guess we’ll be popping.”
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