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SACRAMENTO – Tens of thousands of Americans lost their homes to foreclosure
in August and tens of thousands more face impending foreclosure, both signs the
nation’s foreclosure abyss has widened.
Already this year 355,624 homes have been taken back by their lenders following
foreclosure, according to analysis of REO filings by longtime California-based foreclosure
experts ForeclosureS.com. An REO (real-estate owned) filing
is the final step in the foreclosure process and occurs when the bank or lender
files notice that it has reclaimed a property for nonpayment of debt.
Despite highly touted government and private efforts to check the nation’s
upward spiral of foreclosures, 11 states have recorded triple-digit increases in
REO filings so far this year vs. the same period last year. This fallout from the
subprime loan debacle shows no signs of abating.
On a per capita basis, which measures the real impact of housing market trends,
a little more than 4 of every 1,000 households in the United States have been lost
to foreclosure this year. That’s up from just over 3 homes per 1,000 during
the same time last year, based on internal research from ForeclosureS.com’s
database of more than 3.5 million property listings.
Equally as troubling, pre-foreclosure filings—including notices of default
and notices of foreclosure auction—continue to increase at an alarming rate.
In fact, if the current trend continues, the number of homeowners in default on
their mortgages in the United States since the beginning of the year could top 1
million by the end of October, according to a ForeclosureS.com analysis.
So far this year, 731,244 pre-foreclosures have been filed nationwide. That translates
to nearly 10 out of every 1,000 households in trouble financially with their mortgages.
The nation’s Northeast and Southeast regions have suffered triple-digit
increases in per capita numbers of homeowners in pre-foreclosure this year compared
with last. Pre-foreclosures in the Southeast--14.2 filings for every 1,000 households--were
up nearly 145% so far this year compared with the same period last year. The actual
number of filings in the Southeast—158,466—also rose 145% to date over
the same time in 2006.
The Northeast, which at midyear seemed to be on track to bounce back from the foreclosure
abyss, showed a more than 116% increase in per capita numbers, with 8 of every 1,000
households facing mortgages in default. The actual number of filings in the Northeast--95,528
to date in 2007—is 120% higher than last year’s number.
It’s a dismal picture, but one that may get a bit brighter
for at least some homeowners, thanks to changes in the Federal Housing Administration’s
lending practices as announced by President Bush last month, says Alexis
McGee, president of ForeclosureS.com
and author of the book, “The Foreclosures.com Guide
to Investing: Making Huge Profits Investing in Pre-Foreclosures Without Selling
Your Soul”(John Wiley, September
17, 2007). Although some homeowners will benefit from the plan,
“Thankfully, though, Bush--along with Fed Chairman Ben Bernanke--rejected
a wide-scale federal bailout of lenders and borrowers,” says McGee. “After
all, both groups, the government leaders agree, made their own financial mistakes.”
Under Bush's plan to help homeowners trapped by subprime ARMs, those who qualify—roughly
80,000 borrowers--will be able to refinance into better and more affordable FHA-backed
loans. Bush also wants to raise the FHA’s disconnected from the current market
(especially the coastal areas), maximum loan limit of $362,000. That will allow
homeowners a chance at FHA loans in markets previously all but priced out, adds
McGee.
“But new bailouts and proposals aside, just how
bad are things likely to get before they start improving? That depends on what day
it is and what reports come from what experts,” says McGee. “The basic
economy remains sound. The just-released Fed's Beige Book, which describes the economic
conditions in regions around the country, points to the fact that while upheaval
in the financial markets has made the housing slump worse, the overall economy hasn't
been widely harmed.”
“At almost the same time, though,” McGee adds, “the National
Association of Realtors reported that its pending sales of existing homes fell in
July to the lowest level in nearly six years. Although the report did support the
argument for an interest-rate cut—we anticipate the Fed will cut its benchmark
Fed funds rate when it meets Sept. 18--it also worried investors who
are nervous about the housing market growing so weak that it drags the economy into
recession.”
The also just-released Mortgage Bankers Association’s National Delinquency
Survey for second-quarter 2007 singles out just four states, California, Florida,
Nevada, and Arizona, as the drivers of soaring national foreclosure numbers. “Get
rid of those states’ problems and national foreclosure numbers actually would
be down, the MBA says,” adds McGee. “Of course, we can’t do that,
plus states like Ohio, Michigan, Tennessee, and others even the MBA admits have
their share of foreclosure issues, too.”
MBA’s latest survey points to a 5.12% delinquency rate (seasonally adjusted)
of all loans outstanding in the second quarter this year, up 28 basis points from
the first quarter, and 73 basis points from a year ago. (1 basis point=0.01%; 100
basis points=1% change) That doesn’t include loans in the process of foreclosure—another
1.4% of all outstanding loans.
Consider a few more numbers from ForeclosureS.com that help paint
the picture of the size and extent of the subprime mortgage problem--a problem that
will have to work its way through the system before things start looking up, adds
McGee. These numbers are from John Robbins, chairman of the Mortgage Bankers Association,
and are quoted from a letter he sent to Jennifer J. Johnson, secretary of the Federal
Reserve’s Board of Governor’s in mid-August:
- 4.9% of current homeowners are subprime borrowers with ARMs.
- Of those subprime ARMs, 10.13% (or approximately 250,000 homeowners) are seriously
delinquent or in foreclosure.
- Delinquencies in the subprime market were significantly higher at the end of 2000
and in 2002 as compared with the first quarter of 2007, according to the MBA’s
National Delinquency Survey, the widely recognized, reputable authority on delinquency
numbers.
Let’s look at ForeclosureS.com August’s default and foreclosure numbers:
Among REO filings, states with triple-digit gains year over year are:
California (with filings up 471%), Arizona (up 217%), Nevada (up 192%), New Mexico
(up 157%), Florida (up 141%), Hawaii (up 138%), New Hampshire (up119%), and Minnesota
(up 112%).
- On a per capita basis, states with the most people losing their home this
year include:
Louisiana (14.7 homeowners out of every 1,000 households
in the state), Michigan (11.1 per 1,000), Nevada (11 per 1,000), Georgia (9.9 of
every 1,000), Colorado (9.8 per 1,000), Indiana (8.8 per 1,000), Ohio (7.6 per 1,000),
and Missouri (7.6 per 1,000).
- Costilla County, Colorado, leads the nation in REO filings per capita so
far this year with 256.2 of every 1,000 households lost to foreclosure. But in a
bit of irony, that’s actually down more than 33% from the same period last
year.
- Other leading counties with their per capita REO filing numbers year to date
include:
Valencia County, New Mexico (80.7 filings per 1,000 households); Mohave County,
Arizona (38.4 filings per 1,000 households); Elko County, Nevada (38.2 filings per
1,000), and East Baton Rouge Parish, Louisiana (33.9 filings per 1,000 households).
- States with the most pre-foreclosure filings per capita year to date include:
Nevada (30.9 per 1,000 households); Florida (21.5 per 1,000); Colorado (16 per
1,000); Illinois (15.3 per 1,000); California (14 per 1,000); New Jersey (14 per
1,000); Arizona (13.5 per 1,000); Utah (10.6 per 1,000); Texas (9.2 per 1,000 households),
and Tennessee (8.7 filings for every 1,000 households).
- Counties with the highest per capita numbers of pre-foreclosure filings nationwide
year to date and for the month of August include:
Alpine County, California (45.5 filings per 1,000 households); Lee County, Florida
(42.3 filings per 1,000); Pinal County, Arizona (40.4 per 1,000); Flagler County,
Florida (40.2 per 1,000), and Clark County, Nevada (39.2 filings per 1,000 households).
Tune in to Alexis McGee on the Foreclosure Markets:
Don’t miss Alexis McGee Live discussing the nation’s foreclosure crisis
and her white knight approach to pre-foreclosure investing--how to make big profits
without selling your soul--coming Sept. 24 and 25 to a radio station in your
area.
The Truth about Foreclosure-Investing:
Coming September 17th, Alexis McGee’s new book: “The ForeclosureS.com
Guide to Investing in Pre-foreclosures Without Selling Your Soul”
John Wiley and Sons (paperback). Available at your favorite bookseller or here:
Guide-to-Making-Huge-Profits-Investing-in-Pre-Foreclosures
About ForeclosureS.com:
Sacramento-based ForeclosureS.com, publisher
of foreclosure property information for more than two decades, has more than 3.5
million listings of current foreclosure filings covering nearly 1,600 major U.S.
counties. To ensure accuracy, ForeclosureS.com bases
its statistics on the numbers of formal notices filed against a property in the
foreclosure process. In some states that can mean up to three filings against one
property—notice of default, notice of foreclosure auction, and notice of REO--after
a property has gone to foreclosure auction and a bank or lender takes possession
of a property. In other states, it’s only two filings—auction notice
and REO notice. Whatever the case, the same property can be counted multiple times,and
inaccurately skew the numbers. To avoid that, ForeclosureS.com
reports only two sets of numbers, Pre-foreclosure (filings before foreclosure) and
REO (after foreclosure) filings.
Media Contact:
Sofia Gutierrez, ForeclosureS.com, 916-860-1190
or sofia@halldinpr.com
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