RealtyTrac has released its U.S. Foreclosure Market Report for May 2011, which shows foreclosure filings—default notices, scheduled auctions and bank repossessions—were reported on 214,927 U.S. properties in May, a two percent decrease from April and a 33 percent decrease from May 2010. The report also shows one in every 605 U.S. housing units received a foreclosure filing during the month of May. "The pattern we are seeing is not reflective of a recovering market, but of the turmoil going on in the servicing and foreclosure industries right now," said Daren Blomquist, director of marketing communications for RealtyTrac. Default notices were filed for the first time on a total of 58,797 U.S. properties in May, a seven percent decrease from the previous month and a 39 percent decrease from May 2010. May’s total was the lowest number of monthly default notices since December 2006— a 53-month low. Foreclosure auctions were scheduled for 89,251 U.S. properties in May, an increase of 3 percent from the 31-month low hit in April, but still down 33 percent from May 2010. May’s monthly increase followed eight straight monthly decreases in scheduled foreclosure auctions. Real estate-owned (REO) properties decreased on a monthly basis for the second straight month in May, with 66,879 U.S. properties repossessed by lenders during the month—a four percent decrease from the previous month and a 29 percent decrease from May 2010. Since the robo-signing controversy came to light in October 2010, REO activity has followed a rollercoaster pattern, with five monthly decreases and three monthly increases. Non-judicial foreclosure activity accounts for two-thirds of national total. A total of 141,348 properties received foreclosure filings in states where lenders primarily use the non-judicial foreclosure process—nearly two-thirds of the national total. Overall foreclosure activity in non-judicial foreclosure states was down three percent from April and down 25 percent from May 2010. A recent consumer study conducted by RealtyTrac and Trulia found that 42 percent of American adults said they thought the housing market would turn around by 2012 or had already turned around. Now, only 23 percent continue to think this will happen. "I think that by 2014, based upon the current foreclosures in process, we will see foreclosure activity return to normal levels, and that has to happen before the housing market can truly recover," said Blomquist. "If you look at REO inventory, which currently stands at approximately 875,000, the pace of sales is very slow right now, and it might take 25 months to sell off those REOs." Scheduled auctions in non-judicial foreclosure states increased 2 percent on a month-over-month basis, led by a 16 percent increase in California and 10 percent increases in Texas, Virginia and Michigan. Although REO activity in non-judicial foreclosure states overall was down six percent from the previous month, some non-judicial foreclosure states posted substantial month-over month increases in REO activity, including Georgia, with a 79 percent increase, Virginia, with a 36 percent increase, and Michigan, with a 19 percent increase. "Banks have improved their ability to sell REOs, as they are being more cautious about what they are selling," said Blomquist. "The whole robo-signing controversy put a cramp into how the banks were selling REOs. The issues surrounding foreclosure title issues has slowed down sales of REOs." A total of 73,579 properties received foreclosure filings in states where lenders primarily use the judicial foreclosure process, virtually unchanged from the previous month, but down 45 percent from May 2010. Scheduled auctions increased six percent on a month-over-month basis in judicial foreclosure states, with Oklahoma posting an 86 percent increase, Maryland posting a 56 percent increase and Illinois posting a 47 percent increase. REO activity in judicial foreclosure states increased one percent on a month-over-month basis, with New York posting a 97 percent increase, New Jersey posting a 21 percent increase, Wisconsin posting a 20 percent increase and Indiana posting an 18 percent increase. "The foreclosure trend is downward nationally, where on the state level, it is like a roller-coaster," said Blomquist. Nevada posted the nation’s highest state foreclosure rate for the 53rd straight month in May, with one in every 103 housing units receiving a foreclosure filing during the month. Nevada REOs in May were down 21 percent from the record high hit in April, while default notices increased eight percent from the previous month and scheduled auctions decreased one percent from the previous month. Scheduled auctions in Arizona increased four percent in May from April, helping the state maintain the nation’s second highest foreclosure rate—one in every 210 Arizona housing units received a foreclosure filing in May. Arizona REO activity in May was down eight percent from the previous month, but virtually unchanged from May 2010. California posted the nation’s third-highest state foreclosure rate, with one in every 259 housing units receiving a foreclosure filing during the month. Scheduled auctions in California increased 16 percent from the previous month, while default notices were down 16 percent to a 31-month low and REOs decreased 25 percent from the previous month. Michigan posted the nation’s fourth highest state foreclosure rate in May, with one in every 311 housing units receiving a foreclosure filing during the month, and Utah posted the nation’s fifth highest state foreclosure rate, with one in every 365 housing units receiving a foreclosure filing during the month. Other states with foreclosure rates ranking among the top 10 were Georgia, Idaho, Florida, Illinois and Colorado. "Nationwide, from the beginning of the foreclosure process—from notice of default to REO—it takes an average of 400 days for properties that were foreclosed upon in the first quarter," said Blomquist. "In 2007, when the foreclosure crisis first started hitting, the process took around 151 days, so the length of the foreclosure process has more than doubled." Five states accounted for 51 percent of U.S. foreclosure activity in May, led by California, where 51,906 properties received a foreclosure filing during the month. A total of 19,192 Florida properties received a foreclosing filing in May, the second highest state total despite a 62 percent decrease from May 2010. Florida initial default notices decreased 10 percent from the previous month, but scheduled auctions and REOs in Florida both increased on a monthly basis. A total of 14,614 Michigan properties received a foreclosure filing in May, the third highest state total, followed by Arizona, with 13,122 properties receiving a foreclosure filing during the month, and Nevada, with 11,039 properties receiving a foreclosure filing during the month. Other states with foreclosure activity totals among the nation’s 10 highest in May were Illinois with 10,574; Georgia with 10,503; Texas with 9,055; Ohio with 8,379 and Wisconsin with 4,660. Rust Belt city breaks into Top 10 metro foreclosure rates dominated by Sun Belt Las Vegas continued to post the nation’s highest foreclosure rate among metropolitan areas with a population of 200,000 or more, with one in every 89 housing units receiving a foreclosure filing in May—more than six times the national average. The Reno-Sparks metro area in Nevada also continued to post a foreclosure rate among the top 10 highest, at number five with one in every 158 housing units receiving a foreclosure filing in May. "The stage is set for buyers and investors to start buying this REO inventory, as there are people out there who have the resources to buy," said Blomquist. "I think some of the title issues regarding REOs and issues with state attorneys general nationwide need to clear up before we can really move forward with an increase in REO purchases."