Filings for Foreclosures Increase but Slower

Filings went up in August by 27 percent compared to previous year’s record but the pace has considerably slowed down compared to previous months.  The data was released Thursday.  

Foreclosures Up by 12% in August

Foreclosures notices were up in August by 12 percent compared to July affecting 303,800 American homes nationwide.  The data indicates that one American household has received a foreclosure notice in August out of every 416 homes.

The increase in August however showed a slowing down of foreclosures compared to the months of July and June by as much as 50 percent or more.  Filings however are still on a record high according to the RealtyTrac report.

RealtyTrac, a company based in Irvine, California monitors the housing sector specifically the number of defaults and auction sale notices as well as repossessions by the banks. Last month, a total of 90,893 homes were repossessed by mortgage lenders.  In 2007 of the same period, only 43,141 were repossessed.  The data showed that the increase of year to year record has almost doubled.

California, Nevada, and Arizona top the list of states where foreclosures were severe.  Following in their footsteps were the states of Florida, Michigan, Ohio, Colorado, Illinois, and Indiana.  Some of the states however reported a decrease in year to year record.

Homeowners Squeezed Dry

Homeowners have been squeezed dry by weak sales, dropping home values, stingier bank credit policies and the general slowing down of US economy.  High prices of fuel also contributed a lot to the burden as more and more homeowners find it difficult to avoid foreclosures.  Homeowners cannot find buyers nowadays and they also encounter hardship when seeking a loan or refinancing their homes.

On the other hand lenders and real estate investors have an over supply of homes and they cut prices just to monetize idle properties.   Fannie Mae and Freddie Mac were told by four Democratic senators to hold foreclosure notices for 90 days.  The beleaguered mortgage companies, which the US government took control, should be able to help homeowners stay at their houses while looking for a suitable loan package.

Moody’s expects 2.8 million American homes will get foreclosure notices by the end of next year.  Homeowners therefore would be forced to sell their properties at less than the actual value of their mortgage.  

The slower pace of homes foreclosures experienced in August was due to the increased economic activity for that month.  Default activity last month was up by 10 percent while auction notices increased by 7 percent year to year.

Analysts said the slower rate of foreclosures may not be a sign of improving conditions.  Instead, it could be due to new legislations protecting homeowners to keep their homes for longer periods while they still look for a home loan.