Loan Modification

Foreclosure activity sets records in 1Q 2009

By Jay Hammond

One in every 159 U.S. housing units have received a foreclosure notice already this year.  Foreclosure filings during the first quarter of 2009 increased 24 percent over the same quarter in 2008, according to the U.S. Foreclosure Market Report. The pace also appears to be increasing with 17 percent more default notices, auction sale notices and bank repossessions reported in March than in February. March 2009 saw 46 percent more foreclosure filings than March 2008. Both the March and first quarter 2009 totals were the highest on record since the report was first published in January 2005.

“In the month of March we saw a record level of foreclosure activity, the number of households that received a foreclosure filing was more than 12 percent higher than the next highest month on record. Since much of this activity was n new foreclosure actions, it suggests that many lenders and servicers were holding off on executing foreclosures due to industry moratoria and legislative delays,”  said James J. Saccacio, CEO of RealtyTrac, the leading online marketplace for foreclosed properties and publisher of the report. “It’s also likely the drop in REO activity can be attributed to these processing delays, rather than to any other foreclosure prevention programs currently in place. It’s very likely we’ll see the number of REOs increase again now that most of the moratoria have been lifted.”

More than 341,000 properties received some type of foreclosure filing in March. Hardest hit were property owners in Nevada, Arizona, California, Florida and Illinois. Foreclosure activity in those five states alone accounted for nearly 60 percent of the first quarter total with 479,516 properties receiving foreclosure notices. California alone counted for nearly 29 percent of the nation’s total with 230,915 properties receiving foreclosure filings during the the first quarter of 2009.

One in every 27 housing units in Nevada received a foreclosure filing during the first quarter of 2009 making the state the national leader in foreclosure activity. This is five time the national average. According to the report, 41,296 Nevada properties received foreclosure filings during the first quarters, up 19 percent over the previous month’s total and nearly 111 percent from the same quarter last year.

The state with the second highest foreclosure rate during the first quarter was Arizona where one out of every 54 housing units received a foreclosure filing. California was a close third with one in every 58 housing units in the state receiving a foreclosure notice during the first three months of 2009. Despite a 12 percent decrease in foreclosure filings from the final quarter of 2008, Florida reported the second highest number of foreclosure filings with 119,220. Florida, where one out of every 73 housing units received a foreclosure filing, posted the fourth highest foreclosure rate for the quarter Rounding out the top ten states with the highest rate of foreclosure activity were Illinois, Michigan, Georgia, Idaho, Utah and Oregon. Illinois, Michigan, Georgia, Texas and Virginia round out the list of top ten states reporting the highest foreclosure activity totals.

The one bright spot overall was that the number of bank repossessions (REOs) declined 13 percent from the fourth quarter 2008 level and 3 percent from February 2009 totals.

“On a positive note, it appears that demand is up in some of the harder-hit areas, particularly on bank-owned REO properties that first time homebuyers and investors see as bargains,” Saccacio concluded. “But it’s unlikely that this increased demand will be enough to offset the growing number of foreclosures in the pipeline, accelerated by rising unemployment rates.”

Full post as published by Blown Mortgage on April 16, 2009 (boomark / email).