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Home Repossession Rate Reaches a One Year High

At one new foreclosure for every 425 U.S. households, a recent report shows the national second-quarter foreclosure rate "was higher than in any quarter of last year."

However, foreclosure filings in the second quarter of 2006 present a classic "good news, bad news scenario," said RealtyTrac CEO, James J. Saccacio, in a company release.

According to the 2006 Q2 U.S. Foreclosure Market Report published by RealtyTrac of Irvine Calif., the number of properties "that entered some stage of foreclosure" during the second quarter 2006 has decreased by 16% when compared to the previous quarter, but remains 25% higher than the same quarter of 2005. The online marketplace for foreclosed properties reported a total of 272,109 properties entered a foreclosure stage during the quarter.

"A 25% increase from the second quarter of 2005 obviously isn't a positive trend," Mr. Saccacio said. "But despite some of the sensational reports we've seen lately, foreclosure filings have actually slowed down since peaking in February."

Among market factors affecting these results, the executive listed low unemployment and home appreciation in most housing markets which have held foreclosures in check even though the national foreclosure rate "has certainly shifted into a higher gear since last year." At the top of the list are Colorado, Georgia and Texas, the three states that posted the highest quarterly foreclosure rates, all of which follow the same "good and bad" national pattern.

In Colorado, the ratio was one new foreclosure filing for every 158 households, putting the state at the top. During the quarter, Colorado reported 11,599 properties in some state of foreclosure, a 13% decrease from the previous quarter, yet 48% higher compared to the same quarter of last year.

Georgia reported a total of 15,309 new filings during the quarter as foreclosure activity "slowed substantially in June" recording one foreclosure for filing for every 202 households and a 37% decrease from the first quarter of 2006 and a 42% increase compared to the same quarter of last year.

In Texas, with 39,690 properties in some foreclosure stage, or one in every 203 households, during the second quarter foreclosure activity was 1% lower than in the previous quarter and 22% higher than the same quarter of 2005. The other states making the top 10 highest foreclosure rates in the second quarter are Utah, Nevada, Indiana, Illinois, Michigan, Florida and Ohio.

In California and Florida, foreclosure numbers followed the same pattern. In California, 27,606 properties are in some stage of default, or 7% less than the first quarter, and a 50% increase compared to 2005. While in Florida 25,853 properties are in jeopardy, or 13% less than the previous quarter, and 16% more than same period last year.

"We forecasted a slowdown in foreclosure rates when we released our last quarterly report and we expect that if the summer months deliver their typically high number of homebuyers," Mr. Saccacio noted, "the demand for housing created by these buyers should help keep foreclosure rates from rising too rapidly."

A key factor to watch over the next quarter, he said, is the extent to which some of the higher risk adjustable rate-mortgages go into default. "Hundreds of millions of dollars of these types of loans are due to reset during the rest of 2006," he explained, "and if they default at a higher rate than more traditional mortgage loans, it could significantly accelerate foreclosure filings."

RealtyTrac reports on about 600,000 properties in foreclosure or pre-foreclosure in over 2,500 counties nationwide.

The online marketplace for foreclosure properties, said that 88,195 properties nationwide entered some phase of the process in June, a decline of 5% from May. Still, RealtyTrac noted that the June foreclosure figure was 17% higher than in June of 2005. The data show a national foreclosure filing rate of one for every 1,311 households during the month.

"New U.S. foreclosures dropped to their lowest level of the year in June alone, despite some of the sensational and misleading figures that we've seen reported recently," said James Saccacio, chief executive officer of RealtyTrac, in a news release.

He said that most states - with the notable exceptions of California, Ohio and Nevada - reported lower foreclosure filings in June. The states with the highest foreclosure rates were Colorado, Nevada and Georgia. Colorado, despite seeing improvement from May, had one new foreclosure filing for every 495 households, giving it a foreclosure rate 2.7 times the national average.

By sheer volume, the greatest number of foreclosure filings occurred in Texas, California and Florida during June, according to RealtyTrac. (c) 2006 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com http://www.sourcemedia.com