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With US home prices at historic lows in many markets and rental rates on the rise, investors are increasingly buying foreclosed properties in distressed markets and converting them into rental properties. According to real estate data firm CoreLogic, the number of completed foreclosures for 2011 totaled 830,000, down from 1.1 million in 2010.  Since the start of the financial crisis in September 2008, there have been approximately 3.2 million completed foreclosures across the US.

Data from CoreLogic also shows that 1.4 million homes in the US (or 3.4% of all homes with a mortgage) were in the process of being foreclosed upon as of December 2011. Foreclosure inventory is measured against homes with an outstanding mortgage—not against all homes. In the US, approximately a third of homeowners own their homes free and clear.

The percent of US borrowers who were 90 days or more delinquent on their mortgage payments (classified as “seriously delinquent”) improved to 7.3% percent in December 2011 compared to 7.8% a year earlier. 

“The inventory of foreclosed properties has begun to shrink, and the pace at which properties are entering foreclosure is slowing. While foreclosure filings are being curtailed by a variety of judicial and regulatory constraints, mortgage servicers are completing REO (foreclosed) sales faster than they are completing foreclosures,” said Mark Fleming, chief economist with CoreLogic. “This is the first time in a year that REO sales have outpaced completed foreclosures, and part of the reason for the decrease in the foreclosure inventory.”