Foreclosures Continue To Gallop

June 16th, 2008 | Tags: Foreclosures

Foreclosures continued to gallop across the country in May increasing its pace by 50%. Across the country 261,255 houses received at least one foreclosure notice last month. This is a jump of 48% from May 2007 when the number had been 176.137. It was a spike of 7% from April 2008.

The foreclosure rates in US in May was 1:484 – the highest since RealtyTrac started keeping records. It is the second highest in consecutive two months.

In all except 10 states the foreclosure numbers increased since the previous year. The worst offenders continued to be Nevada, California, Arizona, Florida and Michigan. The metropolitan regions in California and Florida were responsible for 9 out of the top areas with the highest number of foreclosures. Stockton in California and Cape Coral-Fort Myers in Florida topped this group. The foreclosure numbers include all the stages of foreclosure from default notice to court auctions and bank repossessions. In May about 74,000 units were taken over by the lenders while fresh default notices were issued to 58,000 borrowers. In Nevada the foreclosure notice rate was 1:118 – it being four times the national median. In California it was 1:183.

The reasons behind this debacle are not far to seek – weak real estate market, falling of house values, tight mortgage lending rules and a general slowing down of the economy of US. Borrowers are left with no option but to face foreclosures. Buyers are difficult to find especially now when the value of the unit has become less than the loan balance. It puts a check on refinancing. To make matters worse the interest rates are rising. It raises concern about the role of the Federal Reserve in battling inflation. The foreclosure numbers coming from the prime long-term mortgages saw sharp increases.

The efforts being made by the mortgage group and the government are being over swamped by the increasing number of new foreclosures rushing in like a tidal wave. Hope Now is beginning to despair!

Rick Sharga of RealtyTrac opines that it is unlikely foreclosures will peak this autumn. More loans taken by borrowers with questionable credit are about to reset. Nearly 50% to 60% of those who are in foreclosure will lose their houses. Perhaps the others will be able to find buyers for their units or refinance.

A new report released by the government says that 1.23% of all the loans held by Bank of America and seven other jumbo banks have entered foreclosure. Last October the number was 0.9%.