Foreclosures Have Touched a Record High

May 6th, 2009 | Tags: Foreclosures

In the wake of increasing job cuts in the US, foreclosures have touched a record high in the first quarter. This was revealed by RealtyTrac.

A sum of 803,489 houses has received a default notice and some were even seized. The number is 24 per cent more than previous year, according to the California-based agency. In March, the total number of filings was 341,180, again a record high. David Olson of the mortgage research firm Wholesale Access said the number of foreclosures has not touched the summit. A lot needs to be done, according to him. A deluge of bank owned real estate has hit the housing market already as recession deepens in America. Already the unemployment level has jumped to 8.5 per cent last month. Already 663,000 people lost jobs, according to statistics available with the Labor department.

Prices of houses fell by 19 per cent in January as compared to previous year. However, applications for mortgage have dropped last week for the first time and there are no signs of recovery of the real estate market. The Federal Reserve Bank tried to boost the housing sector by reducing the cost of home loans but to no avail.

President Obama’s home-rescue plan is meant to save 9 million property owners nearing default by giving them access to cheaper loans. Around 7.6 million people whose houses are under mortgage did not qualify as they owe too much than what their homes merit. This was revealed by real estate valuation service Zillow.com.

The plummeting home prices and shooting unemployment levels will make default cases increase further as property owners find themselves mired in a strange problem —where their debt levels are higher than what their homes are worth. Consultant David Lykken said delinquencies cannot be stopped unless these things are stopped. RealtyTrac’s CEO said James Saccacio said an increase in foreclosures will not be able to offset the increasing number in the pipeline, which is getting accelerated by growing unemployment levels. Already filings saw an increase of 9 per cent in the last half.

The foreclosure rate is the highest in Nevada. One in every 27 homes has been foreclosed there exceeding the nation’s average by five times. Arizona came second with one in 54 homes while California ranked third.

Closely following the ranks are Florida, Illinois, Utah, Oregon amongst others. Five states made up for 60 per cent of the nation’s foreclosure filings including California.