For the past three months, the number of homes possessed by lenders (REOs) has fallen, reaching the lowest level in a year in April, even though the total level of foreclosure filings has risen to a record high.

Tens of thousands of foreclosures are in process, officially counted as foreclosures by RealtyTrac and the news media but not finalized, even as the numbers of REO sales hitting the market has fallen.

Is a flood of new distress sales about to swamp the nation's real estate markets, driving down values even further than the record declines of recent months? In a news release issued yesterday, the CEO of RealtyTrac thinks so.

"Total foreclosure activity in April ended up slightly above the previous month, once again hitting a record-high level," said James J. Saccacio, chief executive officer of RealtyTrac.
 
"Much of this activity is at the initial stages of foreclosure - the default and auction stages - while bank repossessions, or REOs, were down on a monthly and annual basis to their lowest level since March 2008. This suggests that many lenders and servicers are beginning foreclosure proceedings on delinquent loans that had been delayed by legislative and industry moratoria. It's likely that we'll see a corresponding spike in REOs as these loans move through the foreclosure process over the next few months."

Fannie Mae, Freddie Mac and many lenders instituted moratoria on foreclosures beginning in November, initially to provide borrowers time over the holidays. They extended them until April 1 to give the Making Home Affordable plan time to launch.
 
Three states, California, Ohio and Illinois, recently signed into law temporary moratoria on foreclosures. California's 90-day moratorium took effect February 25 and Illinois' took effect April 5. Michigan, New York, and Rhode Island, are among those considering their own moratoria. Minnesota recently rejected legislation for a one-year moratorium.

At this juncture, only the rapid ramp up of the Administration's program to modify of thousands of loans will head off the inevitable. And even that program doesn't work for everyone, especially families hit hard by layoffs
 
Steve Cook is a nationally recognized speaker and author. He has worked with various companies and organizations as a consultant. He has an extensive background in public relations, journalism and politics.
 
heck out his Real Estate Economics News blog on RealTown. Contact Steve at .scook@reeconadvisors.com