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September Foreclosures Double Year-Ago Levels

Defaults driven by higher payments on adjustable-rate loans

October 11, 2007

The company’s monthly report for September shows there were 223,538 foreclosure filings last month, including default and auction notices and bank repossessions. The firm says subprime borrowers remain the biggest victims, struggling to meet the higher payments of adjustable rate mortgages.

“The truth of the matter is that borrowers are going into default as soon as they hit their adjustments,” said Rick Sharga, executive vice president of marketing at RealtyTrac.

California moved into the top spot with the most foreclosure actions, at 51,259. Florida was second with 33,354. Nationwide, the foreclosure rate was one out of every 557 households.

The numbers bode ill for the struggling real estate market. As more properties go into foreclosure, they create a glut of inventory on real estate markets nationwide. These involuntary sales compete with homeowners who are actively trying to sell their homes, making it harder to do so.

Mortgage applications

According to the Mortgage Bankers Association’s Weekly Mortgage Applications Survey, the Market Composite Index for the week ending October 5, 2007, came in at 652.0, an increase of 2.4 percent on a seasonally adjusted basis from 636.7 one week earlier.

On an unadjusted basis, the Index, a measure of mortgage loan application volume, increased 2.4 percent compared with the previous week and was up 8.6 percent compared with the same week one year earlier.

The Refinance Index increased 2.7 percent to 2003.2 from 1950.4 the previous week and the seasonally adjusted Purchase Index increased 2.1 percent to 420.2 from 411.4 one week earlier.

The average contract interest rate for 30-year fixed-rate mortgages increased to 6.40 percent from 6.32 percent, with points decreasing to 1.00 from 1.08 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.

The average contract interest rate for 15-year fixed-rate mortgages increased to 6.03 from 5.95 percent, with points increasing to 1.12 from 1.07 (including the origination fee) for 80 percent LTV loans.

The average contract interest rate for one-year ARMs decreased to 6.15 from 6.21 percent, with points increasing to 0.92 from 0.89 (including the origination fee) for 80 percent LTV loans.

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