Foreclosures in U.S. reach a record high
By ALEJANDRO LAZO - Los Angeles Times
LOS ANGELES -- The number of U.S. homes taken back by banks through foreclosure hit a record high in the second quarter, even as lenders delayed more homes from entering the process through short sales and loan modification efforts, according to data to be released Thursday.
This growing supply of lender-owned properties could set back the nation's housing recovery but probably won't sink it completely if the nation's employment situation doesn't deteriorate further and the economy begins to pick up steam, experts said. Sales of homes have faltered nationally in recent months with the expiration of government tax incentives for buyers.
U.S. bank repossessions increased 38 percent in the second quarter from the same period a year earlier for a record total of 269,952, according to Irvine, Calif., research firm RealtyTrac. That was also a jump of 5 percent from the previous quarter. If that pace continues through the year, the number of homes taken by banks is likely to top 1 million by the end of 2010, said Rick Sharga, RealtyTrac senior vice president.
More than 1 million American households are likely to lose their homes to foreclosure this year, as lenders work their way through a huge backlog of borrowers who have fallen behind on their loans.
Nearly 528,000 homes were taken over by lenders in the first six months of the year, a rate that is on track to eclipse the more than 900,000 homes repossessed in 2009, according to data released Thursday by RealtyTrac Inc., a foreclosure listing service.
"That would be unprecedented," said Rick Sharga, a senior vice president at RealtyTrac.
Millions of Americans are still likely to lose their homes in the coming years, but the foreclosure crisis is finally showing signs of subsiding.
The number of households facing foreclosure in April fell 2 percent from a year ago, the first annual decline in five years, RealtyTrac Inc. said Thursday.
But the data aren't all sunny. While the number of new delinquencies is dropping, the number of borrowers losing their homes is still rising. Banks seized a record 92,000 homes last month.
The number of U.S. households facing foreclosure in January increased 15 percent from the same month last year, and a surge in cash-strapped homeowners who've fallen behind on mortgages could be on the way.
More than 315,000 households received a foreclosure-related notice in January, RealtyTrac Inc. reported Thursday. That number is down nearly 10 percent from 349,000 in December.
In January, one in 409 homes was sent a filing, which includes default notices, scheduled foreclosure auctions and bank repossessions. Banks repossessed more than 87,000 homes last month, down 5 percent from December but still up 31 percent from January 2009.
Foreclosures are likely to be a part of the real estate market for several years, but opinions about distressed properties are shifting, according to a study released this week.
Realty Trac, a company that tracks foreclosures nationwide, teamed with Trulia Inc., a real estate website, to study foreclosure opinions in the United States.
The study, conducted for the companies by Harris Interactive, found that fewer potential home buyers would consider buying a foreclosure than last year and fewer survey takers had negative opinions about foreclosures.
Foreclosures increased in Horry and Georgetown counties in March, and officials say they don't expect to see a decline any time soon.
In March, foreclosures in Horry County were up 8percent from the same month last year and up 50 percent in Georgetown County, according to data released this week by Realty Trac, a company that tracks foreclosures across the United States.
There was a 129 percent jump in foreclosures in the first three months of the year in Georgetown when compared with the previous three months, and a 50 percent increase from the same months last year.
"It is almost a certainty that we will see over a million over the course of the year, and that would definitely be a record," he said. "It's serious, but it doesn't appear to be that these levels will crater the housing market if the economy at least stabilizes and we do start to see some job creation."
A total of 895,521 foreclosure notices were filed on U.S. properties during the second quarter, an increase of less than 1 percent from the same quarter a year earlier and a 4 percent decrease from the first quarter, according to RealtyTrac. Notices of default - the first stage of the foreclosure process - were down 19 percent from the same quarter a year earlier and 11 percent from the first quarter.
"What is happening is that the number of loans that are going into delinquency is abating, but the number of loans that are moving through the foreclosure process is rising," said Mark Zandi, chief economist for Moody's Economy.com. "This is because many loans got piled up in the foreclosure process as mortgage servicers tried to figure out all the various loan modification plans and policy efforts to mitigate foreclosure activity. Now, at this point, servicers are figuring out these programs and are starting to push loans through the process."
Because housing has stabilized and banks have improved their financial positions since the start of the financial crisis, regulators are pressing them to get rid of their troubled loans.
"There is growing pressure on the banks to get problem residential loans worked out one way or another," said Bert Ely, an independent banking consultant. "And the sense is that, in most markets, we are through the worst of it to the extent the economy improves at all."
In California, foreclosure filings totaled 192,422 in the second quarter, a 24 percent decrease from the same quarter a year earlier and an 11 percent drop from the first three months of the year. Notices of default were down 43 percent from a year earlier and 15 percent from the first three months of the year.
California also appears to be bucking the trend in bank seizures, with that number up only 1 percent at the end of the second quarter from the year-earlier quarter and down 1.5 percent from the first quarter. That relatively moderate increase is probably because banks are purposely postponing the auctions of homes to keep a flood of properties off the market, Sharga said, and will not last forever.
"California might be too saturated, in terms of what the banks are willing to put on their books right now," he said. "You will definitely see it coming later.
"Because of how out of control the prices and lending practices got during the boom, and now because of high levels of unemployment, California is probably going to be at the center of the foreclosure crisis until it's over," Sharga said.
Read more: http://www.thesunnews.com/2010/07/15/1586960/foreclosures-in-us-reach-a-record.html#ixzz0tl5ofcKL
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