Foreclosures Fall 5%

The foreclosure plague seems to have reached its peak and started to fade, but the recovery is still fragile.

The number of foreclosure filings of all types — including notices of delinquency, auction notices and repossessions — fell during the first six months of 2010, according to RealtyTrac, the online marketer of foreclosed properties.

There were 1,654,634 properties with foreclosure filings, a 5% decline compared with the previous six months. That equates to 1 out of every 78 homes being at risk.

Unfortunately, the pace of bank repossessions quickened, with nearly 270,000 homes lost to foreclosure during April, May and June, a 5% increase over the three winter months.

The filings data showed improvement because fewer properties were entering the foreclosure process. Part of that is because lenders are now more committed to modifying defaulting mortgages or allowing homeowners to sell their homes for less than they owe.

At the same time, lenders have cleared many properties out of the foreclosure pipeline, finalizing repossession proceedings rather than allowing homes to sit in limbo.

However, there is still much inventory to move through the system and experts aren’t sure how bad it will be.