Foreclosures down slightly, but no signs of stabilization yet
Filed under: Economy
Anyone hoping for a housing bottom will likely be discouraged by the RealtyTrac's foreclosure report this morning. U.S. foreclosure filings topped 300,000 for the third straight month in May and are expected to hit a record 1.8 million by the end of the first half of the year. The number of filings fell 6 percent from last month, but as foreclosures continue to mount there are clear signs that the banks aren't buying into President Obama's mortgage rescue plan. When President Obama announced the program earlier this year with great fanfare, he promised to save the homes of 9 million people, but based on the steady flow of new foreclosure filings, the banks are not cooperating. Once the cramdown provision -- which would have given bankruptcy courts the ability to reduce the principal of mortgages underwater -- was killed by the Senate, there were no teeth in the Obama plan.
Living at ground zero of the toxic assets (my area, Orlando/Kissimmee, was eighth on the metropolitan area foreclosure list this month), the evidence is in front of me that foreclosures continue to mount. Real estate sales people tell how foreclosed homes that sold for $200,000 or more just a couple of years ago are now being sold for less than $80,000 by the banks.
If banks are willing to take that much of a loss after the expense of foreclosure, wouldn't some adjustment in the value of the home to avoid foreclosure be more cost effective? But so far banks have resisted any type of loan program that requires them to adjust the principal amount of the mortgage.
Job losses and falling property values continue to delay the housing recovery as more homeowners are unable to pay their mortgages or sell their homes. Unemployment is now up to 9.4 percent and many expect it could still climb higher.
The mortgage crisis, which at first impacted primarily subprime loans, is now hitting prime borrowers. About 29 percent of loans that entered the foreclosure process were prime, fixed-rate mortgages, according to the Mortgage Bankers Association. Homes in some stage of foreclosure totaled 3.85 percent of all loans in the first quarter, up from 2.47 percent a year earlier.
"The numbers are getting bigger and that's what is bothering me," Patrick Newport, an economist at IHS Global Insight told Bloomberg. "You have banks holding these toxic loans, which means bank balance sheets are in even worse shape with the increase in delinquencies."
Nevada, California and Florida continued to outpace the rest of the country in foreclosure filings. Nevada had the highest foreclosure rate, one in every 64 households, which is more than six times the national average. California was second at one in 144 households followed by Florida at one in 148 households. Arizona was fourth with one in 158 households and Utah was fifth with one filing per 316 households. The areas with the biggest jump in number of foreclosure filings were Michigan, Washington and New York.
The city with the highest foreclosure rate was Las Vegas, with one in every 54 households getting a notice, which is up 78 percent from a year ago. California has six cities among the top 10, and Florida has three.
Lita Epstein has written more than 25 books including The 250 Questions You Should Ask to Avoid Foreclosure.
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Reader Comments (Page 1 of 7)
6-11-2009 @ 9:58AM
Sharon said...
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Reply
6-11-2009 @ 10:23AM
lovinitathome said...
The rules have changed. If you're looking for a great job, with a great company, with great benefits, that you will have your entire life, until you retire, stop looking. That was then this is now. That job doesn't exist anymore for 99% of us. Unless you have unique and remarkable skills you better figure out what will work best for you and your family. I am a former executive who left the corporate world to help people adjust to the new realities. My suggestion to most is to do what millions of people are doing now, find a good home business. That won't work for everyone but if you find one that you can get into for virtually no investment and learn the right skills, you should do well.
6-11-2009 @ 10:08AM
George said...
There you have it.........Give the banks your money(TARP), and they spit in your face.
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6-11-2009 @ 8:30PM
what? said...
Just a question, Do some of you realize that the bank LENT out the amount of principal? That is the same as you giving somebody money and then having them say they only want to pay back half or none of the money. How would you feel?
6-11-2009 @ 10:08AM
redmagic007 said...
But the liers running the country into the ground say things are getting better ! lol The banks are not going to help people they never had any intension of helping anyone but there own. Just one more lie the american people had no say in>>>>>> TAXATION WITHOUT REPRESENTATION
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6-11-2009 @ 10:53AM
SHUTUPDEMLIARS said...
RED,AGOC007 Just lies""" if the dems / lib's don't wake up we all are goung to be in foreclosure soon. Obama is the new god and what a line of bs that is has his feet on the desk of the oval office like he ownes it low class no class is what I thnk but I maybe wrong.
6-11-2009 @ 10:49AM
quentin said...
The goverment allowed selling homes to illegals and now that the boom is over they walk away from their homes. They trash these homes like the third world people they are. Does anyone in goverment give a damn to the facts. The homes are not even saleable because they are not up to codes.
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6-11-2009 @ 10:23AM
INSIDESHOVEL said...
HIGH OIL PRICES ARE WHAT'S CAUSING THIS . IF WE DON'T STOP THE OIL CO. GOUGING, WE'RE HEADED STRAIGHT FOR A DEPRESSION.
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6-11-2009 @ 10:45AM
James said...
Doesnt helpt that interest rates are rising. i am a mortgage consultant for a bank and with these rates rising i cant help anybody. The programs that are in place are bullshit and somebody needs to do something about this otherwise the foreclosures will continue to pile up.
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6-11-2009 @ 10:21AM
dajt57 said...
bingo. we gave free money to the top. nothing has been done to fix the bottom. we just guaranted banks 100% profits on foreclosed homes. it is getting worse.
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6-11-2009 @ 7:26PM
john said...
How many times do the folks sticking the pitchforks in the air about the banks have to be told that they were loaned the money and are paying it back with 5% interest to the government. I would not call that a give away! Use your brain and think with the facts, not the popular mantra.
Furthermore, how about the clowns that took $500,000. mortgages on $40,000. incomes then walk away because (duh!!) their balloon payments came due. Who is more unethical?
6-11-2009 @ 10:21AM
Chuck said...
Why in the hell should banks care? They were given Trillions of taxpayer dollars to offset the losses. AIG was floated billions to cover the mortgage insurance payouts on the losses the banks are incurring on these properties that are worthless, so basically the taxpayers, homeowners who still have jobs and paying their mortgage are covering the banks losses. We're now at 30% of the prime loans defaulting, these are people who verified income, had good credit and jobs when they bought. What do you think is going to happen when all these bankrupt dealerships can't pay the leases on their lots because they are sitting empty, or these big box stores like Circuit City who have left these cornerstone properties vacant go into foreclosure? Banks have the means, the taxpayers have given it to them, to stop this pillaging of the real estate market but for some reason have chosen to ignore the problem. Another issue is the coverage. I'm not blaming Obama for any of this, it's not his fault, but, if George Bush or any republican were president, we'd have news crews following these millions of displaced families and reports of the shear hoplessness of 4M families losing their homes.
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6-11-2009 @ 6:56PM
Oh Mighty Wizard said...
The fact is that the same REPUBLICANS who occupied the boardrooms and structured the "Credit Default Swaps" and other methods to loot the economy are still running the banks. They have 2 reasons for maintaining the foreclosure nightmare occurring in this country now.
First, they have a political agenda. They want to see the Democratic administration fail so that they can return to power and divide whatever is left of our national resources. Just like they have been doing since the Reagan administration.
Secondly, if the Obama administration succeeds in saving our nation (and the world) from another 30's style economic meltdown; the real property assets they skim off the top will be worth 3x to 5x the underlying defaulted loans they foreclosed on, and took tax credits for. It's time for a truth and reconciliation commission to investigate just who wrecked the economy, made a profit from it and what politicians they bought.....People need to go to jail!
6-11-2009 @ 12:00PM
DON said...
ALMOST THE SAME AS UNEMPLOYMENT WONDER WHY
THAT IS..... NO JOB CAN'T PAY? OBAMA JUST GOT 1.8 BILLION FROM BANKS WHY DON'T HE LOAN IT OUT TO SMALL BUSINESS,SO WE CAN CREATE JOBS,HE'D RATHER GIVE TO FAILED BANKS AND CAR CO,
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6-11-2009 @ 10:52AM
Tom T said...
Just wait there is a flood of almost a trillion dollars in commercial foreclosures comming this summer. If you think there are alot now, hang on the real crash is comming. The problem w/ the current plan from the government is that no one can meet the criteria for the Obama mortgage rescue program. With the continued job losses more foreclosures in residential are comming as well. I have noticed that everything Obama has done is all political agenda with no regard to the consequences or repercussions down the road. All of their estimates have been way too positive and didn't take into account the huge losses in tax revenues due to unemployment and business closings.
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6-11-2009 @ 3:22PM
kathy said...
You hit the nail on the head !!!!! I know several people, who have nice homes, and good jobs, and are very well educated. They had their hours cut, or got demoted and were able to keep their jobs, but for instance would like to switch from a 15 year to a 30 year, to help them get 'over the hump' - just trying to be honest, protect their investment, and be pro-active and the lenders in every case have denied them. In the meantime they struggle to stay afloat. The bank says stop making your payment for 3 months and call us back, then we might be able to help you - then, the banks rack up late fees, etc., the people in question damage their credit score, and in the future when they apply for credit will have to pay out the ass in interest for not having 'good credit', which was caused by the bank, so they can pay the bank higher interest - what is wrong with this picture!!! A kindergartener can see that these policies just aren't going to work. Something needs to be done before we become a 3rd world country, and done fast !!!!
6-11-2009 @ 3:43PM
Chuck said...
You do know that commercial real estate can be crammed down by bankruptcy judges?
6-11-2009 @ 10:37AM
JUST GOING BROKE said...
I HAVE LOST 60% OF MY WORK AND NOW THE BANKS ARE TELLING ME THAT THEY CAN NOT DO ANYTHING FOR ME I HATE TO SAID THIS BUT I HAVE NO CHOSE BUT TO WALK AWAY FROM MY HOUSE AND THE BANK CAN HAVE IT.....IT 20 YEARS OF WORKING MY ASS OFF THIS IS WHAT I GET.....ONLY IN THE USA....CAND U GET @%#@ LIKE THIS
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6-11-2009 @ 10:50AM
Ed said...
Big surprise !!! My wife and I bought a house in March because of the "First Time Homebuyers" tax credit. I filed an amended 2008 tax return because the house had been in foreclosure. When the prior owner left he took all the appliances with him. The $8000 credit was to help us get a new washer/dry6er, refrigerator, cooktop, built-in oven, dishwasher. The IRS keeps promising the refund in 8-12 weeks. It's now been over 12 weeks and I can't get any answers when this will be paid. We are now paying on the new home and an apartment to live in until we get the new appliances. I am now forced to beg with the IRS for money that was promised. I am starting to think that this has all been just a cheap political ploy by the new administration.
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6-11-2009 @ 5:33PM
jelun said...
Big surprise !!! My wife and I bought a house in March because of the "First Time Homebuyers" tax credit. I filed an amended 2008 tax return because the house had been in foreclosure. When the prior owner left he took all the appliances with him. The $8000 credit was to help us get a new washer/dry6er, refrigerator, cooktop, built-in oven, dishwasher. The IRS keeps promising the refund in 8-12 weeks. It's now been over 12 weeks and I can't get any answers when this will be paid
So... you went out and bought a house without understanding how the system worked? And somehow that is someone else's fault? How did you not know that the money was something you would have to wait for?
Buy second hand, use freecycle. Use your head. Stop blaming the rest of the world.