[CitizensTruth] Foreclosure filings spike 71%

[Daniel Stafford]

http://money.cnn.com/2008/10/23/real_estate/foreclosures/index.htm?postversion=2008102305

Maybe we should all just move into tents and trailers and tell the banks 
to shove the houses sideways. - D.


 
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  Foreclosure filings spike 71%


    Third quarter numbers saw a sharp rise compared to last year; in
    September, 81,312 homes were repossessed by lenders.

By Catherine Clifford, CNNMoney.com staff writer
Last Updated: October 23, 2008: 11:32 AM ET

NEW YORK (CNNMoney.com) -- The housing crisis still has a choke hold on 
America: In September, 81,312 homes were lost to foreclosure, according 
to a report released Thursday.

RealtyTrac, an online marketer of foreclosed properties, said that 
851,000 homes have been repossessed by lenders since August 2007.

In September, 265,968 troubled borrowers received foreclosure filings - 
such as default notices, auction sale notices and bank repossessions. 
That's a decline of 12% from the record high number of filings in August 
<http://money.cnn.com/2008/09/12/real_estate/foreclosures/>, but 21% 
more than in September 2007.

All told 765,558 foreclosure filings were made on U.S. properties in the 
third quarter of this year - up 3% from the second quarter and 71% from 
the same period last year.

"We have never seen a foreclosure cycle like this one before," said Rick 
Sharga, Realty Trac senior vice president. Other periods of elevated 
foreclosure rates have been preceded by signs of economic weakness. 
However, "in this cycle, we have foreclosure problems that have caused 
an economic downturn."

States step up

The most recent monthly dip in foreclosure filings was caused largely by 
decisions by several states to relax housing laws.

"Much of the 12% decrease in September can be attributed to changes in 
state laws that have at least temporarily slowed down the pace at which 
lenders are moving forward with foreclosures," Realty Trac CEO James 
Saccacio said in a statement.

For instance, California - one of the states hardest-hit states in the 
housing crisis - has a new law that requires banks to contact struggling 
homeowners at least 30 days before delivering a notice of default. 
That's helped to drastically slow the number of foreclosure filings in 
the state.

"In September, we saw California [defaults] drop 51% from the previous 
month," said Saccacio. "That had a big impact on the national numbers 
since California accounts for a third of the nation's foreclosure activity."

North Carolina passed a similar law, and notices of default there fell 
by 66% in September.

Unfortunately, even these extensions aren't saving most troubled 
borrowers. "The intention is very worthwhile, but I think the net result 
in most cases is simply delaying the inevitable," said Sharga.

"If a few homeowners are able to stay in their homes as a result of the 
legislation, then it had a positive effect," said Sharga. However, "the 
longer you are in foreclosure, the harder it becomes to pay the debt you 
owe to get out of foreclosure," he added.

Circumstances in Massachusetts illustrate his point. That state enacted 
a law back in May requiring lenders to give troubled homeowners 90 days 
notice before initiating foreclosure, which pushed the number of 
foreclosure filings it reported way down for several months. But in 
September, when the law expired, filings spiked.

"Initial foreclosure filings in Massachusetts jumped 465% from August to 
September after being much lower than normal in June, July and August," 
said Saccacio.

Nevada once again had the nation's highest foreclosure rate, with one 
out of ever 82 homes in foreclosure. Florida had the second highest rate 
in September, with one in every 178 homes in default. California came in 
third, with one in every 189 homes there receiving foreclosure filling 
last month.

Waiting to see what's next

As foreclosures continue to wreck havoc across the nation's housing 
market, the U.S. government has announced unprecedented efforts to 
absorb toxic debt and shore up investor confidence. The "Hope for 
Homeowners" rescue bill went into effect Oct. 1 
<http://money.cnn.com/2008/10/22/real_estate/help_for_homewoners/index.htm?postversion=2008102216> 
and will allow some troubled borrowers to refinance into mortgages 
backed by the Federal Housing Authority. And more recently, a massive 
financial rescue plan calls for Treasury to buy up troubled assets, 
mostly backed by bad loans, to stabilize the financial system 
<http://money.cnn.com/2008/10/21/news/economy/paulson_poll/index.htm?postversion=2008102206>.

However, as home buyers and lenders wait to see the effects of the 
plans, "there is a lot of uncertainty in the market right now," said Sharga.

Still, he thinks that the market could be nearing a bottom, even as 
uncertainty remains high.

"If everything goes right, we will be done with almost all the subprime 
loans by sometime in the first quarter of 2009," said Sharga. "The 
market could start to stabilize at that point."

The bad news: The housing market will be flooded with bank-owned homes. 
"We are estimating that by the end of this year, between one quarter and 
one third of all homes for sale will be bank owned properties," he said.

That could push down prices even more, perpetuating a vicious cycle, but 
it might also start to attract bargain hunters who may absorb some of 
the massive housing inventory.  To top of page 
<http://cnnmoney.printthis.clickability.com/pt/cpt?action=cpt&title=Foreclosure+filings+spike+71%25+in+3rd+quarter+-+Oct.+23%2C+2008&expire=-1&urlID=31895100&fb=Y&url=http%3A%2F%2Fmoney.cnn.com%2F2008%2F10%2F23%2Freal_estate%2Fforeclosures%2Findex.htm%3Fpostversion%3D2008102305&partnerID=2200#TOP>

First Published: October 23, 2008: 5:01 AM ET
Find mortgage rates in your area <http://money.cnn.com/pf/rates/>


 
 

 
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