Foreclosures Continue to Rise in February

Despite the efforts to stem foreclosures by government and many banks, the hopeful signs of the last quarter of 2008 and January didn’t follow through in February, according to top executives from two companies that track foreclosures across the country.

RealtyTrac’s February 2009 U.S. Foreclosure Market Report shows foreclosure filings including default notices, auction sale notices and bank repossessions on 290,631 properties during February, an increase of nearly 6% from January and up almost 30% from February 2008. The increase is somewhat surprising, given that many of the foreclosure prevention efforts and moratoria in place in January were extended through most of February as well, said James J. Saccacio, chief executive officer of RealtyTrac in Irvine, Calif. “There were some notable exceptions to this: a 45-day voluntary moratorium in Florida expired at the end of January and foreclosure activity there was up 14% from the previous month, and many New York foreclosure proceedings delayed by a new law for an extra 90 days appear to have hit the system in February, when the state’s foreclosure activity increased 23% from the previous month,” Mr. Saccacio said.

Nevada continued to document the nation’s top state foreclosure rate. Foreclosure filings were reported on 15,783 properties, a 9% increase from January and a 156% increase from February 2008. Arizona posted the second highest rate with one in every 147 housing units receiving a foreclosure filing, and California was third with one in every 165 housing units receiving a foreclosure filing. Foreclosure filings were reported on 80,775 California properties in February, the most of any state and a 5% increase from January. The state’s foreclosure activity increased 51% from February 2008, with auction sale notices increasing 179%.

Florida reported a 158% year-over-year increase in auction sale notices and a 128% year-over-year increase in bank repossessions. With 46,391 properties receiving a foreclosure filing, the state posted the nation’s second highest total in February.

Arizona, Nevada, Illinois, Michigan, Ohio, Texas, Georgia and Virginia also reported foreclosure totals that were among the nation’s 10 highest.

One in every 60 Las Vegas housing units received a foreclosure filing in February, giving the city the nation’s highest rate among metro areas with a population of at least 200,000. The city’s foreclosure rate was more than seven times higher than the national average. Another Nevada metro area posted a foreclosure rate in the top 10: Reno-Sparks ranked No. 8, with one in every 108 housing units receiving a filing.

The Cape Coral-Fort Myers, Fla., metro area documented the second highest foreclosure rate in February, with one in every 65 housing units receiving a foreclosure filing during the month. Six California cities registered foreclosure rates among the top 10: Stockton at No. 3 (one in 67 housing units), Modesto at No. 4 (one in 68), Merced at No. 5 (one in 74), Riverside-San Bernardino at No. 6 (one in 80), Bakersfield at No. 7 (one in 85) and Vallejo-Fairfield at No. 10 (one in 111). With one in every 110 housing units receiving a foreclosure filing, the Phoenix metro area posted the ninth highest foreclosure rate in February.

Foreclosures increased in February across all regions despite temporary halts by major banks and Fannie Mae and Freddie Mac, according to the latest U.S. Foreclosure Index released by Foreclosures.com. The company, based in Sacramento, Calif., said the increase was seen primarily in the second half of the month.

Completed foreclosures in February reached the highest monthly total since the foreclosure crisis began, soaring by more than 67% over January’s reduced foreclosures.

Foreclosures.com, which bases its analysis on the number of formal notices filed against a property during the foreclosure process, said in February 121,756 new foreclosures were completed, up from 72,694 in January, which had seen a 26% drop from December’s 97,841 foreclosures. The February number topped the previous monthly high of 104,243 new foreclosures seen last September, then the high-water mark for this crisis.

The index also found the number of pre-foreclosure filings — the original filings that can lead to a foreclosure — increasing to the all-time highest monthly total, hitting 207,703 in February, up more than 24% from 166,860 in January and up 9% from 190,467 in December, the previous monthly high. Alexis McGee, president of Foreclosures.com, said many homeowners are in trouble and rising unemployment continues to threaten to intensify the problem.

In anticipation of the Obama administration’s foreclosure mitigation effort, Fannie Mae and Freddie Mac previously had foreclosure moratoria from Nov. 26 to Jan. 31, which helped to slow down foreclosures during that period, and reinstated the moratoria in mid-February. Nearly all the bank moratoria have since expired or are about to expire.

“Annualizing the first two months of this year, if foreclosures were to continue unabated, we could end up with another 1.2 million homes back in lenders’ hands by year-end,” said Ms. McGee. “However, I am hopeful that our new administration’s plan to stem the foreclosure tide will take hold and we will see fewer foreclosures by year end. The Fed means business, and they’re throwing money — lots of it — behind the foreclosure crisis.”

Just last week, the Mortgage Bankers Association’s National Delinquency Survey showed that the delinquency rate for mortgage loans on one-to-four unit residential properties rose to a new record seasonally adjusted rate of 7.88% of all loans outstanding as of the end of fourth-quarter 2008. Ms. McGee said those numbers don’t include loans somewhere in the foreclosure process (a record 3.3% of all loans outstanding). MBA numbers also show that foreclosure inventory jumped sharply in the fourth quarter, while the number of loans entering foreclosure was relatively unchanged due in part to all the foreclosure moratoriums.

Regionally, the U.S. Foreclosure Index of Completed Foreclosures showed activity in the Southwest for February up more that 63% from January, but down nearly 1.5% from the national monthly hit high of September 2008. In the Midwest, REO went up nearly 90% from January, and 30% from September 2008. For the Southeast, REO was up more than 46% from January, and up 19.5% from September 2008. In the Northeast, REOs grew by 138% and 232% . Other states (Alaska and Hawaii) went up nearly 68% from January, and up 28.6% from September 2008.