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Foreclosures Continue To Mount

Record foreclosures in three out of last five months

August 13, 2009
Banks foreclosed on distressed homeowners in record numbers in July, as falling home prices and rising unemployment combined to wreck havoc in the housing market.

Foreclosure filings - default notices, scheduled auctions and bank repossessions - were reported on 360,149 U.S. properties during the month, an increase of nearly seven percent from the previous month and an increase of 32 percent from July 2008. The report by the real estate marketing firm RealtyTrac also shows that one in every 355 U.S. housing units received a foreclosure filing in July.

"July marks the third time in the last five months where we've seen a new record set for foreclosure activity," said James J. Saccacio, RealtyTrac's CEO. "Despite continued efforts by the federal government and state governments to patch together a safety net for distressed homeowners, we're seeing significant growth in both the initial notices of default and in the bank repossessions."

For the 31st consecutive month Nevada documented the nation's highest state foreclosure rate, with one in every 56 housing units receiving a foreclosure filing in July - more than six times the national average. Initial default notices (NOD) in Nevada decreased 18 percent from the previous month, likely the result of a new state law requiring lenders to offer mediation to homeowners facing foreclosure. The law took effect July 1.

Meanwhile, scheduled auctions (NTS) and bank repossessions (REO) in Nevada both increased more than 20 percent from the previous month, boosting overall foreclosure activity in the state by 4 percent on a month-over-month basis.

Initial defaults in California spiked 15 percent from the previous month, and the state registered the nation's second highest state foreclosure rate for the third month in a row. One in every 123 California housing units received a foreclosure filing in July, nearly three times the national average. Scheduled auctions in California were down one percent from the previous month, but bank repossessions were up four percent - leaving overall foreclosure activity up nearly seven percent on a month-over-month basis.

One in every 135 Arizona housing units received a foreclosure filing in July, the nation's third highest state foreclosure rate and more than 2.5 times the national average. Scheduled auctions, the first public record in the Arizona foreclosure process, jumped 25 percent from the previous month while bank repossessions stayed flat.

Other states with foreclosure rates ranking among the nation's 10 highest were Florida, Utah, Idaho, Georgia, Illinois, Colorado and Oregon.

The top four state foreclosure activity totals in July were reported by California, with 108,104 properties receiving a foreclosure filing; Florida, with 56,486 properties receiving a foreclosure filing; Arizona, with 19,694 properties receiving a foreclosure filing; and Nevada, with 19,535 properties receiving a foreclosure filing. Together these four states accounted for nearly 57 percent of the nation's total foreclosure activity.

Although Florida bank repossessions fell by eight percent from the previous month, the state's overall foreclosure activity was still up seven percent from the previous month because of a nine percent month-over-month increase in both initial default notices and scheduled auctions.

Illinois registered the fifth highest state foreclosure activity total, with 14,524 properties receiving a foreclosure filing during the month. Overall foreclosure activity in Illinois increased nearly 35 percent from the previous month, boosted by an 86 percent surge in default notices, which bounced back from low levels in May and June. A state law enacted April 5 gave delinquent borrowers an extension of up to 90 days before the start of the foreclosure process.

Other states with totals among the 10 highest in the country were Texas (12,077), Georgia (11,136), Ohio (11,021), Michigan (8,257) and New Jersey (6,467).

Foreclosure activity in Michigan dropped 39 percent from the previous month, mostly due to a 66 percent decrease in scheduled auctions. A state law that took effect July 6 requires lenders - before scheduling a foreclosure auction - to provide delinquent borrowers a uniform default notice with contact information for approved housing counselors who can assist in loan modification. The law freezes foreclosure proceedings an extra 90 days for homeowners who commit to work on a loan modification plan.

Foreclosure filings were reported on 16,798 Las Vegas properties in July, one in every 47 housing units - more than 7.5 times the national average and the highest foreclosure rate among metro areas with a population of at least 200,000. The city's foreclosure activity increased nearly 6 percent from the previous month and 89 percent from July 2008.

Seven California metro areas documented foreclosure rates among the top 10 in July. Stockton posted the nation's second highest metro foreclosure rate - one in every 62 housing units received a foreclosure filing - followed by Modesto at No. 3 (one in 63), Merced at No. 5 (one in 66), Riverside-San Bernardino-Ontario at No. 6 (one in 67), Bakersfield at No. 7 (one in 76), Vallejo-Fairfield at No. 8 (one in 83), and Sacramento-Arden-Arcade-Roseville at No. 10 (one in 105).

Other cities with top 10 metro foreclosure rates were Cape Coral-Fort Myers, Fla., at No. 4, with one in every 64 housing units receiving a foreclosure filing, and Phoenix-Mesa-Scottsdale, Ariz., at No. 9, with one in every 103 housing units receiving a foreclosure filing.

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