Foreclosures starting to decline

RealtyTrac's Foreclosure Market Report found foreclosure activity for all of 2011 decreased 34 percent in total properties compared to 2010, 33 percent below the 2009 total and 19 percent less than 2008 figures.

The report showed 1.45 percent of U.S. housing units had at least one foreclosure filing in 2011, down from 2.3 percent in 2010, 2.21 percent in 2009 and 1.84 percent in 2008. The total U.S. foreclosure activity and the U.S. foreclosure rate in 2011 were at their lowest levels since in 2007.

"Foreclosures were in full delay mode in 2011, resulting in a dramatic drop in foreclosure activity for the year," said Brandon Moore, CEO of RealtyTrac. "The lack of clarity regarding many of the documentation and legal issues plaguing the foreclosure industry means that we are continuing to see a highly dysfunctional foreclosure process that is inefficiently dealing with delinquent mortgages."

The federal government is taking steps to combat the expected influx of foreclosures to hit the market once the delay is over and banks return to their processing. Federal Reserve officials want to reduce the loan principal for underwater borrowers, or sell foreclosed properties owned by Fannie Mae and Freddie Mac to real estate investors to be transformed into rental properties, the Los Angeles Times reports.

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