Processing by the lenders is further delaying the foreclosure movements and has brought down the number of bank repossessions during the first quarter of this year. This has led to a sudden drop in distressed properties entering the market.

The number of foreclosure of March suggests however that once more activity could be inching upwards as the lenders are handling better the foreclosure pending cases. Last quarter 215,046 residences were taken over by the banks – it being 6% less than the last quarter of 2010 and 17% less than the same first quarter of 2010 according to RealtyTrac.

The number of units being served with a foreclosure notice for the first instance also dropped by 17% from the fourth quarter of 2010 and 35% from the first quarter of 2010. This tapering off in foreclosure movements relates to the paperwork problem that came to light last autumn.

Since then the banks have done their internal reviewing and this has led to a delay in starting off new foreclosures. Courts have delayed progress in New Jersey, New York and Florida where foreclosures require the nod from the judge.

But from last February to March the number of repossessions went up by 13% – the highest in one year. The number of residential owners receiving default notice for the first time went up by 16%.

Rick Sharga of RealtyTrac said, “The bottleneck is opening up little bit and we’re starting to see the first inklings that we might be getting back to more normal levels of foreclosures. By this Sharga meant the stepped up pace of foreclosure movements that had caused to take back over 1 million houses in 2010.

Approximately borrowers numbering 5 million are two months lagging behind in their mortgage payments –  at the least. Many reasons that led up to the foreclosure crisis will continue to drive up the numbers this year also – high levels of unemployment, wobbly real estate market, plummeting value of properties and stricter lending standards.

The delay in foreclosure processing is the most prominent in those states where judicial nod is required for it go ahead.  Florida is one such state; foreclosure movement dropped by 47% since the last quarter of 2010. It is now taking about 17 months from receipt of first notice of default till the unit is placed for auction sale; the norm is 4 months. New York and New Jersey are also judicial foreclosure states and here the processing is running into as much as 27 months.