U.S. Foreclosures Hit Record in August as Housing Prices Fell
By Dan LevyU.S. foreclosure filings rose to a record in August as falling home prices made it harder to sell or refinance homes to pay off the mortgage, RealtyTrac Inc. said.
Owners of 303,879 properties, or one in 416 U.S. households, got a default notice, were warned of a pending auction or foreclosed on last month. That was the most since reporting began in January 2005. Filings increased 27 percent from a year earlier, about half the annual pace of previous months, because of high default totals in August 2007, the Irvine, California- based seller of foreclosure data said in a statement today.
‘‘The chickens have come home to roost,'' Jim Croft, founder of the Mortgage Asset Research Institute in Reston, Virginia, said in an interview. ‘‘Real estate inflation bailed out an awful lot of bad loans.''
The worst housing slump since the 1930s shows little sign of abating. Home prices in 20 U.S. metropolitan areas declined 15.9 percent in June from a year earlier, according to the S&P/Case- Shiller index. Prices may fall another 10 percent through the end of 2009, according to analysts at Lehman Brothers Holdings Inc.
August filings were 11 percent higher than the previous record of 273,001 set in May, according to RealtyTrac. Filings rose 12 percent from July. Bank seizures, the last stage of the foreclosure process, known as real estate-owned or REO properties, more than doubled from a year ago to 90,893.
Defaults rose 10 percent and auctions rose 7 percent from August 2007, said RealtyTrac, which has a database of more than 1.5 million properties.
There are 3.9 million unsold existing single-family homes, the most since at least 1982, according to the Chicago-based National Association of Realtors. There is an 11.1 month supply of existing unsold homes at the current sales pace, up from 4.6 months in September 2005, the Realtors said.
Financing is difficult to obtain, and borrowers must put down 20 percent to 30 percent of the purchase price, said Mark Goldman, senior loan officer at Windsor Capital Mortgage in San Diego. About 90 percent of borrowers at his company get 30-year, fixed-interest-rate loans, he said.
The August increase in filings was the smallest annual gain since February 2007, when defaults increased 19 percent from a year earlier. A new federal housing law designed to help homeowners avoid foreclosure may be slowing the rate of increase of defaults and auctions, James Saccacio, RealtyTrac's chief executive officer, said in the statement.
‘‘ The question now is whether these measures will actually reduce foreclosures or simply cause a temporary lull in foreclosure activity,'' he said.
Nevada had the nation's highest foreclosure rate for the 20th consecutive month, with one in 91 households in some stage of default, according to RealtyTrac. Filings rose 16 percent from the previous month and 89 percent from a year earlier to 11,706.
California had the second-highest rate, one in 130 households, and the most filings at 101,724, a third of the nation's total. Defaults increased 40 percent from the previous month and 76 percent from August 2007.
Arizona had the third-highest rate at one in 182 households, followed by Florida, Michigan, Georgia, Ohio, Colorado, Illinois and Indiana, RealtyTrac said.
Florida ranked second with 44,000 filings, a 4 percent decrease from the previous month and a 30 percent increase from August 2007. Arizona was third in filings at 14,333, up 7 percent from July and almost 63 percent from a year earlier.
Michigan, New Jersey
Michigan ranked fourth in filings at 13,605. Defaults decreased 13 percent from a year earlier. Nevada, Ohio, Texas, Illinois, Georgia and New Jersey were also among the top 10 states with the most filings, RealtyTrac said.
New Jersey's foreclosure rate ranked 11th at one filing in 536 households, and New York ranked 33rd at one in 1,444 households.
California had eight of the 10 metropolitan areas with the highest foreclosure rates, led by Stockton at one in 50 households. Merced, Modesto, Vallejo-Fairfield and Riverside-San Bernardino ranked second through fifth. Bakersfield, Salinas- Monterey and Sacramento, the state capital, ranked eighth through 10th.
Cape Coral-Fort Myers, Florida, had the sixth-highest metro foreclosure rate at one in 66 households and saw a 3 percent decrease in filings. Las Vegas was seventh at one in 75 households, and had an 83 percent increase in defaults, according to RealtyTrac.