U.S. Housing Market being hit badly by the sheer volume of houses going into foreclosure hit a new record a 1.5 Million Foreclosure Filings. Recent job losses and falling property hikes deepened the house market recession.
More than 1.5 Million home owners’ received an auction notice or default or were seized by banks in the last six months through June, according to the Irvine, a California-based seller of default data. A huge 15 percent hike from the year earlier. 1 in 84 of U.S. households received a filing.
According to Richard Green, director Lusk Center for Real Estate at University of Southern California ; “People are losing their jobs, seeing their income go down and are underwater on their mortgage……….. It’s a toxic combination”.
20 major major U.S. metropolitan areas suffered a drop in housing prices, almost 18.1% drop in April from a year earlier, according to the S&P/Case-Shiller index. Also, the unemployment rate climbed to 9.5% in June, a record since 1983, bringing number of lost jobs to a total of almost 6.5 Million since the economic slump (started in December 2007), the Labor Department said.
Default spread through Borrowers with poor credit histories spurred for the housing market recession and spread next to the prime borrowers as sales decreased. On May 28th, the Mortgage Bankers Association said that prime fixed-rate home loans to the most creditworthy borrowers accounted for 29% of new foreclosures in the first quarter, the biggest share of any type of loan.
1/8 Americans is now late on a payment or already in foreclosure, the Washington-based mortgage group said.
Nevada, California and Florida Leading Foreclosure Rates
Around 20 out of 50 U.S. counties with the highest foreclosure rates turned out to be in California and around 12 were in Florida, according to RealtyTrac said.
The highest rate in the nation was found to be in Nevada, home to Las Vegas. It had the with one in every 13 households receiving at-least a filing. According to RealtyTrac. Lee County, Florida, home to Fort Myers and Cape Coral, ranked second at one in 14. 3 counties were at tie for 3rd place at one in 15 households: California; Osceola, Merced, Florida; and Lyon, Nevada.
Riverside, California ranked 6th; Nye, Nevada was found to be 7th; and San Joaquin, San Bernardino and Stanislaus, all in California, ranked 8th through 10th.
No Way Back
According to Donald Haurin, “I don’t see any turning of the tide,” an economics professor at Ohio State University in Columbus. “The effect of more foreclosures will be continued downward pressure on house prices, and lead to difficulty making mortgage payments that are continuing to reset.”, he said in a statement.
Payment-option on adjustable rate mortgages may contribute to greater defaults, said Rick Sharga, Exec. VP of RealtyTrac. Option ARMs allow borrowers to pay less than the interest they owe each month, tacking on the difference to their total debt and creating the potential for larger bills for the future.
Around 3/4th (three by fourth) of loans taken will require higher payments in the near future and in the year 2011, with the peak expected in August 2011 when around 54,000 loans recast, suggested the data from First American CoreLogic of Santa Ana, California.
President Barack Obama’s $275 billion assurance to jumpstart sales and encourage banks to modify sour loans as well as Government and lender-supported plans to help troubled homeowners — have had little or hardly any effect, Haurin said.
Fresh Approaches
According to Sharga, As many as 3.2 million U.S. households will get a foreclosure filing by the end of the year.
“Stemming the tide of foreclosures is a critical component to stabilizing the housing market, so it is imperative that the lending industry and the government work in tandem to find new approaches to address this issue,” RealtyTrac’s CEO James Saccacio, said in his statement.
Around 8.3 Million U.S. house owners owed even more than their houses. Additional borrowers will land in trouble because of their loans, if prices further decline around 5%, First American said on March 4th .
Foreclosure filings in the 2nd quarter numbered by to a record tally of 889,829, up 11% from the 1st Quarter and up 20% from a year earlier. Total June filings were estimated to be around 336,173, 3rd highest monthly total record, since January 2005.
The highest foreclosure hit state was Nevada with 1 in 16 households receiving a filing. Around 68,708 properties were hit by this situation, 61% more than in the first half of 08.
Situation In Top 10 States
Following Nevada’s footsteps was Arizona, the second highest foreclosure rate, one in 30 households; Florida was next taking third at one in 33; and California ranked 4th at one in 34. Other states in the top 10 included Illinois, Michigan, Georgia , Idaho, Colorado and Utah.
With around 391,611 filings, California led with an increase of 15 percent from a year earlier; followed up by Florida with 268,064 and a 42% increase.
Arizona was third with 89,799 filings, up 55% percent, and followed up by Illinois with at 4th with 68,932, up by 29%. Other states in the top 10 for their sheer number of foreclosures and defaults were Nevada, Michigan, Ohio, Georgia, Texas and Virginia.
A Better Story
New Jersey was amongst the first 25 States with highest rate, with 21st, one in 146 households, and 23,889 filings. That’s a 30% decrease from a year earlier. Connecticut stood at 27th highest rate, 1 in every 163 households, and had 8,801 filings, a 32 percent%.
New York stood at 38th, with One in 328 households receiving a filing, which fell from 19% to 24,210.
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