IL Sees Defaults Spike
Irvine, CA-Efforts by the government to delay foreclosures do not appear to be stopping the tsunami of foreclosure actions taking place in states like Illinois, where activity increased almost 35% in July, boosted by an 86% surge in default notices, which bounced back from low levels in May and June, according to the latest U.S. Foreclosure Market Report from RealtyTrac here.
A state law enacted April 5 in Illinois gave delinquent borrowers an extension of up to 90 days before the start of the foreclosure process. "No matter how well intended state laws designed to prevent foreclosures may be, they can't overcome the decline in property values or the loss of jobs," said Nanci Weissgold, a partner with the Washington law firm of K&L Gates.
"The unfortunate reality is that borrowers don't have the income to support even a modified loan. This report shows that these state laws are merely delaying the inevitable."
The RealtyTrac report shows foreclosure filings were reported on 360,149 properties, up 7% from June and an increase of 32% from July 2008. "We're seeing significant growth in both the initial notices of default and in bank repossessions," noted James Saccacio, CEO of RealtyTrac.
For the last two and a half years, Nevada has documented the nation's highest state foreclosure rate. In July, initial default notices in Nevada decreased 18% from June, likely the result of a new state law requiring lenders to offer mediation to homeowners facing foreclosure, which took effect July 1.
Scheduled auctions and real estate-owned assets in Nevada both increased more than 20% from June, boosting overall foreclosure activity in the state by 4% on a month-over-month basis.
Initial defaults in California spiked 15% from June, and the state registered the nation's second highest state foreclosure rate for the third month in a row. Scheduled auctions in California were down 1% from June, but REO were up 4%.
In Arizona, scheduled auctions jumped 25% from June 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; Arizona, with 19,694 properties; and Nevada, with 19,535 properties. Together these four states accounted for nearly 57% of the nation's total foreclosure activity.
Although Florida bank repossessions fell 8% from June, the state's overall foreclosure activity was still up 7% from the previous month because of a 9% month-over-month increase in both initial default notices and scheduled auctions.
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).
Michigan foreclosures dropped 39% from June, due to a 66% decrease in scheduled auctions.
A state law freezes proceedings an extra 90 days for those who commit to work on a loan mod plan.