Economic Recovery? No Spinning These Numbers – August 2010 Lenders Foreclose More Homes Than At Any Time Since Mortage Crisis Began

US homes lost to foreclosure up 25 pct on year

LOS ANGELES — Lenders took back more homes in August than in any month since the start of the U.S. mortgage crisis.

The increase in home repossessions came even as the number of properties entering the foreclosure process slowed for the seventh month in a row, foreclosure listing firm RealtyTrac Inc. said Thursday.

In all, banks repossessed 95,364 properties last month, up 3 percent from July and an increase of 25 percent from August 2009, RealtyTrac said.

August makes the ninth month in a row that the pace of homes lost to foreclosure has increased on an annual basis. The previous high was in May.

Banks have been stepping up repossessions to clear out their backlog of bad loans with an eye on eventually placing the foreclosed properties on the market, but they can’t afford to simply dump the properties on the market.

Concerns are growing that the housing market recovery could stumble amid stubbornly high unemployment, a sluggish economy and faltering consumer confidence. U.S. home sales have collapsed since federal homebuyer tax credits expired in April.

That’s one reason fewer than one-third of homes repossessed by lenders are on the market, said Rick Sharga, a senior vice president at RealtyTrac.

[The reason only 1/3 of the foreclosed homes are  “on the market” is that the banks are tryoing to protect the value of their inventory of foreclosed homes, by limiting the number on the market thay are artificialy propping up the value of the “foreclosed home market”. The Government tax credit did not create “new housing demand” it simply shifted sales forward … Google: Federal Home Trac Credit Fraud – to read about the mismanagement of that program by the Federal Government – or Google: Mortgage Fraud Continues]

“These (properties) are going to come to market, but very slowly because nobody wants to overwhelm a soft buyer’s market with too much distressed inventory for fear of what it would do for house prices,” he said.

As a result, lenders are putting off initiating the foreclosure process on homeowners who have missed payments, letting borrowers stay in their homes longer.

The number of properties receiving an initial default notice – the first step in the foreclosure process – slipped 1 percent last month from July, but was down 30 percent versus August last year, RealtyTrac said.

Initial defaults have fallen on an annual basis the past seven months. They peaked in April 2009.

Barney Frank - Chairman House Banking Committee - The Man In Charge Of Watching Over Fannie

Still, the number of homes scheduled to be sold at auction for the first time increased 9 percent from July and rose 2 percent from August last year. If they don’t sell at auction, these homes typically end up going back to the lender.

More than 2.3 million homes have been repossessed by lenders since the recession began in December 2007, according to RealtyTrac. The firm estimates more than 1 million American households are likely to lose their homes to foreclosure this year.

[Realty Tracs number are way off, that or the AP is not reporting them correctly – At least 8 million homes have been foreclosed – 2.3 million homes have been foreclosed and placed on the market for sale. More than 2.3 million homes have been foreclosed in the States of Michigan and Nevada alone]

In all, 338,836 properties received a foreclosure-related warning in August, up 4 percent from July, but down 5 percent from the same month last year, RealtyTrac said. That translates to one in 381 U.S. homes.

The firm tracks notices for defaults, scheduled home auctions and home repossessions – warnings that can lead up to a home eventually being lost to foreclosure.

Among states, Nevada posted the highest foreclosure rate last month, with one in every 84 households receiving a foreclosure notice. That’s 4.5 times the national average.

Rounding out the top 10 states with the highest foreclosure rate in August were: Florida, Arizona, California, Idaho, Utah, Georgia, Michigan, Illinois and Hawaii.

Economic woes, such as unemployment or reduced income, are now the main catalysts for foreclosures.

Lenders are offering a variety of programs to help homeowners modify their loans, but their success rates vary. Hundreds of thousands of homeowners can’t qualify or fall back into default.

The Obama administration has rolled out numerous attempts to tackle the foreclosure crisis but has made only a small dent in the problem. Nearly half of the 1.3 million homeowners who enrolled in the Obama administration’s flagship mortgage-relief program have fallen out.

The program, known as Making Home Affordable, has provided permanent help to about 390,000 homeowners since March 2009.

[A program that was touted by Obama as something that would help 9,000,000 home owners at a cost of nearly $700 billion dollars has in fact helped only 300,000 and tens of thousands leave the program every month as their homes sink futher “under water”]

http://www.forbes.com/feeds/ap/2010/09/16/general-us-foreclosure-rates_7933661.html?boxes=Homepagebusinessnews

 

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