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Foreclosures climb higher in August
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THE ASSOCIATED PRESS
Updated: Sep. 16, 2010 | 8:38 a.m.
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 in a report today.
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.
"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.
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.
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.
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@vegaslee, I think you are 100% correct and I would bet the number falling in that category is staggering. I would venture further there might be a correlation with income, those at the high end are probably finding houses elsewhere and buying their way out of the old one with high priced attorneys, etc. Remember an article maybe 2 years ago talking about the real estate brokers who were buying their exact same house at discount prices and then bailing on the old overpriced house ? It really is a vicious downward out of control spiral right now. The obama bailouts are helping zero in LV...those who can afford the payment aren't qualified for relief, and those who can't afford it were liar loans scared to come clean and admit their deceptions. No end in sight if you ask me.
It would be interested in seeing some data on how many of these Foreclosures are just people that can afford their home but are walking away because they are under water. I am betting that number is getting larger and those people are making this worse on everyone.
How is it the government's fault that people bought houses they could not afford in the first place? If I only make 50K a year, why did I buy a house that was 400k? Seems like it was my fault not anyone else's
THE DEMOCRATS DON'T HAVE A CLUE !!!
Help those who Default, ignore those who Pay despite being upside down? How Dumb. I proposed over two years ago to give discounts in principal (and in phases) to those who Pay. That would reward responsible behavior, and would have limited foreclosures and limited or prevented recession.
Maybe Harry can propose yet another bail out? Maybe he can force US to buy our neighbor's home (while they continue to live in it)?
We're all in this together, right Harry? Tax and spend and redistribute, right Harry?
Just look what Harry has done for us! It's great living here. Good thing Harry has lots of "clout". Yeah.
bingowaba, it may not be totally fair to blame banks entirely. As you point out the financial system failed, and the system is created by the federal government. Banks were only playing by the rules and even then the rules weren't being enforced. In my opinion the governemnt did 2 things; 1) decided everybody should be a homeowners (and then turned their banks to the creative financing to achieve this goal) 2) removed tax deductions on credit card interest and instead allowed deductions for interest paid on a home equity loan (this is why people were so willing to take out 2nd and 3rd mortgages). The numbers were there that predicted this downfall, but the people who knew it and could have prevented it didn't care...becuase they were making too much money and they knew nobody was watching. I don't have an answer either, but actions that don't clean the slate for homeowners and banks at the same time is just going to fail one way or another.
At the core of this is the banks and their greedy works. Maybe we should look at a better financial system? I'm not smart enough to figure one out, maybe someone can?