US Foreclosure Filings Jump 23% to Record in Third Quarter
Oct. 15 (Bloomberg) -- U.S. foreclosure filings climbed toa record in the third quarter as lenders seized more propertiesfrom delinquent borrowers, according to RealtyTrac Inc.
A total of 937,840 homes received a default or auctionnotice or were repossessed by banks, a 23 percent increase froma year earlier, the Irvine, California-based seller of defaultdata said today in a report. One out of every 136 U.S.households received a filing, the highest quarterly rate inrecords dating to January 2005.
“The problem is prime loans going into foreclosure andpeople being underwater and losing their jobs,” Richard Green,director of the Lusk Center for Real Estate at the University ofSouthern California in Los Angeles, said in an interview. “It’sa really bad number.”
Mounting foreclosures mean U.S. home prices probably willresume falling, analysts from Amherst Securities Group LP in NewYork said Sept. 23. A “shadow inventory” of 7 millionproperties are in the foreclosure process or likely to beseized, up from 1.27 million in 2005, they said.
The pace of prime and so-called alt-A loan defaults isaccelerating as subprime defaults slow, Standard & Poor’sanalysts led by Diane Westerback said yesterday in a report.Prime loans are those made to borrowers with the best creditrecords while alt-A loans are considered riskier because theywere often granted without documenting the borrower’s income.
Securities Losses
More than $400 billion in U.S. home mortgages that werepackaged into securities and sold by companies other thangovernment-supported Fannie Mae and Freddie Mac are in defaultand may be foreclosed on, S&P said. Those defaults may depresshome prices for years, the analysts said.
The delinquency rate for prime loans rose to 6.41 percentin the second quarter from 6.06 percent, the Washington-basedMortgage Bankers Association said Aug. 20. The share of primeloans in foreclosure increased to 3 percent from 2.49 percent,the MBA said.
“The number of people who can’t pay their mortgages, wehaven’t seen the peak of that,” David Lowman, head of JPMorganChase & Co.’s mortgage unit, said this week. “That’s going toweigh on us for some time to come.”
Home foreclosures will climb through late 2010, peakingafter the unemployment rate reaches 10.2 percent in the secondquarter, the mortgage bankers said in an Oct. 13 forecast.
RealtyTrac reported that 343,638 properties receivedforeclosure filings in September alone, the third-highestmonthly total behind July and August of this year. The Septembernumber fell 4 percent from the previous month, though it climbed29 percent from a year earlier.
Few Exceptions
Bank seizures rose 21 percent from the previous quarter andincreased in every state except two and the District ofColumbia, RealtyTrac said.
Nevada had the highest foreclosure rate: one in every 23households, or almost six times the national average. A total of47,925 Nevada homes got filings, up 10 percent from the previousquarter and 59 percent from a year earlier, RealtyTrac said.
In both Arizona and California, one in 53 householdsreceived filings. They were followed by Florida, at one in 56,and Idaho, at one in 97. Utah, Georgia, Michigan, Colorado andIllinois rounded out the top 10 highest rates.
New Jersey had the 15th highest rate. Connecticut was 25thand New York was 39th.
Six states accounted for more than 60 percent of totalfilings in the U.S., led by California’s 250,054. Filings in themost populous state rose 19 percent from the third quarter of2008. Bank seizures jumped 12 percent from the previous quarter.
Florida Repossessions
Florida had the next highest total, with 156,924 filings,up 23 percent from a year earlier. Bank seizures rose 16 percentfrom the previous quarter.
Arizona had 50,342 filings, up 25 percent from the sameperiod a year earlier. Nevada had 47,925, up 59 percent.Illinois had 37,270, a gain of 30 percent; and Michigan had37,026, an increase of 22 percent.
Georgia, Texas, Ohio and New Jersey rounded out the top 10states with the most filings, RealtyTrac said.
The company collects data from more than 2,200 countiesrepresenting 90 percent of the U.S. population.
To contact the reporter on this story:Dan Levy in San Francisco at dlevy13@bloomberg.net.
Last Updated: October 15, 2009 00:00 EDTSource: Bloomberg
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