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Foreclosure activity falls in Kansas and Missouri

Date posted:  6/2/15 12:00:00 AM There were fewer foreclosures in Kansas and Missouri compared to the national average.

Two states in the Midwest are posting positive housing numbers, causing optimism among homeowners.

Fewer families in Missouri and Kansas have been forced from their homes due to foreclosure activity in November, and while the nation's foreclosure activity dropped nine percent from the month prior, both states vastly outperformed the national average. Kansas had a 25 percent decline over that span, according to RealtyTrac.

Missouri was even stronger. The Show-Me State watched foreclosure activity fall more than 42 percent in November from the previous month. The state also had a 29 percent dip in foreclosure activity on a year-over-year basis in November. Missouri had only 924 residential foreclosures during the month, meaning only one foreclosure was completed for every 2,933 homes throughout the state. DS News reported 1,597 Missouri homes were foreclosed on in October.

"Slowly but surely, the market's winding through the rat's nest of toxic loans and moving past those," Daren Blomquist, vice president of RealtyTrac, told DS News. "The loans that originated since 2009 are performing much better and not foreclosing at such high rates."

Another reason for Missouri's drop in foreclosures could be a more stable economy. The unemployment rate has fallen to its lowest level in six years, according to the state Department of Economic Development. The jobless rate hit 5.6 percent in November, a 0.3 percent drop from 5.9 percent in October.

Housing still has a ways to go
But the positive data doesn't mean the housing market is where it needs to be, according to Blomquist. He said the nation's real estate still has a long way to go, and it could take some time before the market gets back to pre-recession levels.

"The housing market is struggling to find the new normal when it comes to a tolerable level of foreclosure activity in this post-Great Recession economy," Blomquist said in a release. "Finding that new normal requires striking a balance between too much loan risk, which would result in another housing meltdown, and too little risk, which could result in a stunted recovery."

Foreclosures around the nation
Kansas and Missouri had vastly improved numbers for foreclosure activity in November, but 30 other states around the country weren't as fortunate.

Kentucky, Tennessee, North Carolina, New Jersey and Oregon were the five worst states for increased foreclosure activity. Each of the five recorded a foreclosure auction increase of more than 114 percent. The top three - Kentucky, Tennessee and North Carolina - were particularly bad, as each of these states reported foreclosure auction increases of at least 157 percent from the year prior.

Washington was also one of the 30 states with more foreclosure auctions in November compared to the previous year, but it was a much smaller seven percent increase.

However, OB Jacobi, president of Windermere Real Estate, believes foreclosure rates in Washington have increased due to banks being more prepared to handle busted loans in the state's largest metro market.

"I think the reason we've seen foreclosure activity go up in Seattle over the past year is because banks are simply better prepared for defaults," Jacobi told RealtyTrac. "As a result, they're able to get a higher volume of foreclosures processed much more quickly."

Blomquist said foreclosure rates are actually higher in 2014 than they were in 2013 in many metro areas across the country. He said this shows lenders are open to taking on a bit more risk than in the past five years.

"But it's unlikely that lenders will dial up that risk level too quickly going forward given that many are still dealing with working through a lengthy and messy foreclosure process on risky loans from the last loose lending spree," Blomquist said.