Friday, June 13, 2008
Foreclosures Rise 48% in May
WASHINGTON -- The number of U.S. homeowners swept up in the housing crisis rose further last month, with foreclosure filings up nearly 50% from a year earlier, a foreclosure listing company said Friday.
Across the U.S., 261,255 homes received at least one foreclosure-related filing in May, up 48% from 176,137 a year earlier and up 7% from April, RealtyTrac Inc. said.
One in every 483 U.S. households received a foreclosure filing in May, the highest number since RealtyTrac started the report in 2005 and the second-straight monthly record. RealtyTrac monitors default notices, auction sale notices and bank repossessions.
Foreclosure filings increased in all but 10 states. Nevada, California, Arizona, Florida and Michigan had the highest statewide foreclosure rates.
Metropolitan areas in California and Florida accounted for nine of the top 10 areas with the highest rate of foreclosure. That list was led by Stockton, Calif. and the Cape Coral-Fort Myers area in Florida.
Nearly 74,000 properties were repossessed by lenders nationwide in May, while more than 58,000 received default notices, the Irvine, Calif.-based company said.
In Nevada, one in every 118 households received a foreclosure-related notice last month, more than four times the national rate. In California, one in every 183 households faced foreclosure.
The combination of weak housing sales, falling home values, tighter mortgage lending criteria and a slowing U.S. economy has left financially strapped homeowners with few options to avoid foreclosure. Many can't find buyers or owe more than their home is worth and can't get refinanced into an affordable loan.
Mortgage rates have been rising, reflecting increased concerns about what the Federal Reserve might do to battle inflation. Freddie Mac reported Thursday that 30-year fixed-rate mortgages averaged 6.32% this week, the highest level in nearly eight months and up sharply from 6.09% last week.
Efforts by the government and mortgage industry to stem the tide of foreclosures aren't keeping up with the rising number of troubled homeowners, and critics say a Bush administration-backed mortgage industry coalition, dubbed Hope Now, is falling far short.
Rick Sharga, RealtyTrac's vice president of marketing, said foreclosures are unlikely to peak until sometime this fall, as more loans made to borrowers with poor credit records were reset at higher levels. "I don't think we've seen the high point," he said.
About 50 to 60% of borrowers who receive foreclosure filings are likely to lose their homes, Mr. Sharga said. The rest are likely to be able to sell or refinance.
A new government report released Wednesday found that among mortgages held by Bank of America, Citigroup Inc. and seven other large banks, foreclosures climbed to 1.23% of all loans in March from 0.9% in October.
As foreclosed properties pile up, they are adding to the inventory of homes on the market and dragging down home prices. The trend is most dramatic in parts of California, Florida, Nevada and Arizona, where prices skyrocketed during the housing boom and are now falling precipitously.
Sales of foreclosures, vacant new homes and other distressed properties now dominate some markets, causing grief for individual homeowners who need to sell for other reasons, like a job in a new city.
Nationwide, one out of every four sales between January and March was a distressed sale, and that figure jumps to more than 50% in the hardest-hit areas like Las Vegas, Detroit and distant suburbs of Los Angeles, according to Moody's Economy.com.
In some neighborhoods, lenders are slashing prices to rid themselves of an unprecedented number of foreclosed properties, sparking bidding wars and multiple offers. While that is a positive for the real-estate market, buyers in other parts of the country are still holding back. "I think a lot of people are waiting to see if we really have hit the bottom," Mr. Sharga said.
Lehman Brothers economist Michelle Meyer said in a report Thursday that U.S. home sales are likely to hit bottom at the end of this summer, but said a recovery in sales is likely to be "feeble." Home prices, she wrote, are still expected to fall another 10% by the end of 2009.
Copyright © 2008 Associated Press
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