U.S. foreclosure activity in April jumped 32 percent from a year ago
to a record high, and should mount because temporary freezes on
foreclosures ended in March, RealtyTrac said on Wednesday.
One in every 374 households with mortgages got a foreclosure filing
in April, the highest monthly rate since RealtyTrac began tracking it
in January 2005. Filings were reported on 342,038 properties last month.
The abundance of distressed properties keeps pressuring home prices,
thwarting a housing recovery that is critical to rejuvenating the
recessionary U.S. economy.
Most of April's filings, which included notices of default and
auctions, were in early stages. Bank repossessions, known as
real-estate owned or REOs, fell on a monthly and annual basis to the
lowest level since March 2008.
This suggests that many lenders and servicers are beginning
foreclosure proceedings on delinquent loans that had been delayed by
legislative and industry moratoria, RealtyTrac chief executive James
J. Saccacio said in a statement.
A temporary foreclosure freeze by major banks and
government-controlled home funding companies Fannie Mae and Freddie Mac
ended before President Barack Obama's massive housing stimulus, unveiled on March 6, could take root.
It's likely that we'll see a corresponding spike in REOs as these
loans move through the foreclosure process over the next few months,
Foreclosure activity rose less than 1 percent in April from March to
post the second straight monthly record. A dip would have been more
typical following the March jump, but the moratoria caused artificial
delays, RealtyTrac said.
It looks like the dam burst in March and continued in April, Rick
Sharga, senior vice president at RealtyTrac in Irvine, California, said
in an interview.
Unemployment that is at its highest rate in more than a quarter
century has left many borrowers drowning in debt even as new federal
housing relief starts to trickle in.
Fear of losing a job is also draining consumer confidence and the willingness to commit to such a large purchase.
Still, housing affordability is at a record high and the deeply
discounted foreclosure market accounts for more than half of home sales
Home prices have tumbled more than 30 percent from their 2006 peaks, based on Standard & Poor's/Case-Shiller indexes.
Also luring first-time home buyers are new federal tax credits and
mortgage rates at generational lows. Fixed 30-year mortgage rates
averaged 4.81 percent in April, down from 5.92 percent a year earlier,
Freddie Mac said.
RealtyTrac expects at least three or four months of high foreclosure
activity before the wave ebbs, noting a lag of up to six months between
unemployment and foreclosure.
If we continue to see buying activity increase, if the jobs market
continues to improve and if the price depreciation slows down we could
start to see a pretty significant effect on foreclosure levels before
the end of the year, said Sharga. But those are three pretty big ifs.
RECOVERY WILL BE VERY LOCALIZED
States where sales and prices soared most during the five-year
housing boom earlier this decade remained the hardest hit. Nevada was
the state with the highest foreclosure rate even though filings fell 18
percent in April from March and bank repossessions dropped 44 percent.
With one of every 68 households with loans getting a filing, more
than five times the national average, total foreclosure activity surged
111 percent from April 2008.
Florida, like Nevada, suffers from a glut of unsold and often
unoccupied properties built on enormous demand from investors looking
to flip the units quickly for large profits.
A 37 percent monthly foreclosure activity jump in April pushed total
filings up 75 percent from a year earlier in Florida. One in every 135
households with loans there got a filing, driven by a spike in default
and auction notices even as bank repossessions fell 7 percent from
California had the third highest state foreclosure activity rate in
April after a 10 percent drop from March, with one in every 138 housing
units getting a filing.
Arizona was in fourth place, followed by Idaho, Utah, Georgia, Illinois, Colorado and Ohio.
The 10 states with the most properties getting filings accounted for
more than three-quarters of the national total, RealtyTrac said.
California had the highest number of filings, followed by Florida,
Nevada and Arizona.
Las Vegas had the highest foreclosure rate among metro areas with
populations of at least 200,000 even though filings fell 20 percent in
April from March. One in every 56 Las Vegas households with loans got a
filing in April, almost seven times the national average.
Cape Coral-Fort Myers, Florida and Merced, California were in second and third place.
Considering these severely effected regions, the recovery is going to be a very localized phenomenon, said Sharga.