The struggling U.S. real estate market may get a fresh kick in the legs from an increase in foreclosures in 2012 after an ebbing of the robo-signing controversy that slowed down repossessions in 2011.

“Foreclosures were in full delay mode in 2011, resulting in a dramatic drop in foreclosure activity for the year,” said Brandon Moore, CEO of RealtyTrac, in its 2011 year-end report released last week.  Moore added that “there were strong signs in the second half of 2011 that lenders are finally beginning to push through some of the delayed foreclosures in select local markets. We expect that trend to continue this year, boosting foreclosure activity for 2012 higher than it was in 2011, though still below the peak of 2010.”

In an interview with Bloomberg, a RealtyTrac spokesman estimated repossessions to rise 25% in 2012, resulting in over a million home seizures in 2012 compared to 804,000 repossessions in 2011.

The robo-signing scandal involved banks such as JP Morgan, Ally Financial and Bank of America initiating foreclosures on the basis of fraudulently signed documents by employees who had not verified the information and who in many instances pre-dated notarized documents. State  attorneys general are currently negotiating a $25 billion settlement with five large banks. The problem of shoddy documentation goes back over a decade, but came to light during the housing crisis, which produced foreclosures many times higher than normal volume. Foreclosures totaled 2.9 million in the peak year, 2010, six times as many as in 2005 before the start of the crisis.

Top analyst Laurie Goodman of Amherst Securities, quoted in Money magazine, warns of a potential housing death spiral, citing her estimate of 4.5 million homeowners who have stopped making payments on their houses on top of the 2.5 million homes already foreclosed since the start of the crisis and the millions of additional homeowners currently underwater on their mortgages. Goodman is recommending that lenders offer principal reductions in return for shared gains in any home price appreciation when the mortgaged home is sold–a policy Ocwen Financial is starting to implement.

The worrisome condition of U.S. housing and mortgage markets prompted the Federal Reserve, in an unusual move, to send a whitepaper to Congress outlining possible policy options beyond the central bank’s normal purview. The Fed whitepaper called for policymakers to make rules facilitating the conversion by banks of their large foreclosure inventory into rental units.

The housing market received a fresh setback last month when the National Association of Realtors revealed it had been inadvertently double-counting home sales between 2007 and 2010, meaning 3 million fewer homes were sold than previously thought. In an interview with AdvisorOne, Richard Green, director of the USC Lusk Center for Real Estate, said “you’re looking at a 14% downward revision in sales. That means we’re probably 14% further away from being through this.”

Relieving a grim view of a foreclosure-depressed market, the Calculated Risk blog assembled some bullish forecasts for new home sales and housing starts for 2012, including Moody’s highly optimistic forecast of 12% and 37% gains over 2011 in those two categories, respectively.