Because of the large role foreclosures have played in our current housing marketing and the role it will continue to play for years to come, I thought it was important to place the following article in its entirety to put some additional perspective on the subject.

We've stated many times that errors and investigations into wrongdoing by mortgage lenders have delayed the foreclosure process, but that may not be true much longer.

by CalculatedRisk on 1/12/2012

RealtyTrac® ... today released its Year-End 2011 U.S. Foreclosure Market Report™, which shows a total of 2,698,967 foreclosure filings ? default notices, scheduled auctions and bank repossessions ? were reported on 1,887,777 U.S. properties in 2011, a decrease of 34 percent in total properties from 2010. Foreclosure activity in 2011 was 33 percent below the 2009 total and 19 percent below the 2008 total.

"Foreclosures were in full delay mode in 2011, resulting in a dramatic drop in foreclosure activity for the year," said Brandon Moore, chief executive officer 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 ? particularly in states with a judicial foreclosure process."

From Reuters: Foreclosure filings hit four-year low in 2011

Bank seizures of homes fell to 804,423 from 1,050,500 in 2010, also marking the lowest level in four years.

"A big part that is inflating the size of the decrease is a continuing extended foreclosure process," said Daren Blomquist, director of marketing communications at RealtyTrac.

This is close to Tom Lawler's estimate of the number of completed foreclosure sales using data from Hope Now.

Earlier this week I argued foreclosure activity would increase in 2012:

There are 4 million seriously delinquent loans (90 day and in-foreclosure). This is about 3 million more properties than normal. Probably when the mortgage settlement is announced, some of these loans will cure as part of the settlement with loan modifications that include principal reduction, but many of these properties will become REOs fairly quickly.

So even though REO inventory is declining, there are still many more [foreclosures] to come ...

My guess is the policy changes will all be announced in the next few months, and that foreclosure activity will increase significantly. Some portion of these REO will be sold in bulk to investors and rented, so it is difficult to tell how many REOs will come on the market.

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