Banks repossessed a record number of homes during the third quarter

Keeping the flow of foreclosures moving is crucial for the sluggish housing market, which is still trying to regain its strength after five years of elevated foreclosures. 

Foreclosure activity in the 24 states where courts are involved in the proceedings accounted for 40 percent of all foreclosure activity in the third quarter and 36 percent of bank repossessions, according to the report.

In those states most affected by the paperwork documentation issue, sales of foreclosed properties accounted for 32 percent of all foreclosure sales nationwide, based on the preliminary September data.

Foreclosure sales in September represented 31 percent of all sales during the month, while repossessed houses alone accounted for 18 percent. 

Meanwhile, the number receiving default notices, the first step in the foreclosure process, dropped to 269,647, down 1 percent from the second quarter and a reduction of 21 percent from the same period last year, according to RealtyTrac.

Foreclosure filings were reported on 347,420 U.S. properties in September, an increase of nearly 3 percent from the previous month and of 1 percent from September 2009. A record total of 102,134 bank repossessions were reported in September, the first time bank repossessions have surpassed the 100,000 mark in a single month.

In all, 930,437 homeowners received a foreclosure-related warning between July and September, up nearly 4 percent from the second quarter but down 1 percent from the same period last year, the report said. One in every 139 housing units received a foreclosure filing during the quarter.

"Lenders foreclosed on a record number of properties in September and in the third quarter, taking a bite out of the backlog of distressed properties where the foreclosure process was delayed by foreclosure prevention efforts over the past 20 months,” Saccacio said.“We expect to see a dip in those bank repossessions — and possibly earlier stages of the foreclosure process — in the fourth quarter as several major lenders have halted foreclosure sales in some states while they review irregularities in foreclosure-processing documentation that has been called into question in recent weeks.”

Nevada, Arizona and Florida posted the nation's worst foreclosure rates in the third quarter, with Nevada posting the highest rate, with one in every 29 Nevada housing units receiving a foreclosure filing during the quarter, almost five times the national average.

More in Banking/Financial Institutions

Warren: Community banks thriving under Dodd-Frank

Read more »