Foreclosure downtrend steepens in Silver State

Foreclosures in Nevada were already on a downward trend when the state's robo-signing law took effect in October, and the decrease in bank repossessions has grown steeper each month, RealtyTrac Inc. said Thursday.

Banks took back 764 Nevada homes in August, down 22.4 percent from the previous month and a 76 percent decrease from the same month a year ago, according to data provided to the Review-Journal by the Irvine, Calif.-based foreclosure listing firm.

Nevada has been supplanted by Illinois as the state with the highest foreclosure rate, dropping to No. 5 in August with one out of every 402 homes in some stage of foreclosure, RealtyTrac reported.

"The decreases we're seeing in Nevada were already starting before legislative intervention in the process," said Daren Blomquist, vice president at RealtyTrac. "However, since the law passed in October, the average year-over-year decrease was 60 percent in REO (real estate-owned) and auction homes. Before that, the average was 25 percent, so the law has definitely exaggerated the decreases."

The evolution of the U.S. foreclosure crisis is increasingly diverging along state lines.

Nationwide, fewer homes were placed on the foreclosure track last month than in August last year, when they hit a 17-year high, RealtyTrac reported.

At the same time, so-called foreclosure starts increased almost exclusively in states like Florida and New York, where the courts must sign off on foreclosures, the firm said.

Conversely, in many so-called non-judicial states, like California and Arizona, the number of foreclosure starts declined versus August last year.

Meanwhile, the number of completed foreclosures nationwide declined last month to 52,380. That's down 2 percent from July and down 19 percent from August last year, the firm said.

RealtyTrac counted 1,489 notices of default filed in Nevada in August, a 63.6 percent dip on an annual basis. However, they're up 40 percent from the previous month. NODs fell to under 1,000 from November through February, then climbed back to about 1,300 a month from March through August, Blomquist noted.

The pace of homes entering the foreclosure process is expected to decline gradually, barring another severe economic shock that sends the slowly rebounding housing market into a tailspin, experts say. But that drop is likely to continue playing out unevenly, in part because of the differing approaches states use to handle foreclosures.

"There's a backlog of delayed foreclosures that are eventually going to come through the pipeline down the road," Blomquist said. "I'm pretty confident we're going to see a jump in Nevada's foreclosure activity in the next six to 12 months. The wildcard is by giving homeowners extra time, how many will be able to avoid foreclosure?"

The Associated Press contributed to this report.