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Charting the market: Foreclosure drop a sign of rebound

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Foreclosure filings on Washington-area homes have fallen 43 percent in the past year. From July 2011 through June 2012, about 21,000 area homes were in the foreclosure process, compared with 37,000 during the previous 12 months.

The picture looks even better when you look back further. In 2008, 98,000 homes in the Washington region were in foreclosure, compared with just 25,000 in 2011.

There are a number of reasons for the sharp drop in foreclosure activity. Here are just a few: First, the borrowers who were in the most trouble went through the foreclosure process early on. Others managed to hang on, find jobs and stay in their homes.

Second, many jurisdictions passed new regulations to slow the foreclosure process. Maryland and the District recently enacted such restrictions, forcing lenders to sharply reduce the number of foreclosure filings.

Third, paperwork problems at several large banks caused filings to fall sharply while the banks straightened things out. You can see the effect of the "robo-signing" scandal in today's charts, which show a significant decline in foreclosure activity after October 2010.

Finally, the market has improved in our area. Buyers are competing with one another for homes, and they are purchasing properties in numbers we haven't seen since 2006. Many are purchasing foreclosures or buying homes from struggling homeowners before the foreclosure process begins.

Still, many delinquent borrowers are out there who have yet to enter foreclosure. So we will continue to see distressed properties on the market. But we're better off than most of the U.S.

Much of the bad news being heard about foreclosures these days refers to nationwide data, which are significantly worse than our local data. Our market has emerged from the real estate meltdown ahead of most of the country, and the flood of foreclosures was simultaneously a cause of and a result of the housing problems we have endured for the past six years.

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