ForeclosureS.com October Report: Pre-Foreclosures Level; REO's Dropping; Recovery has Begun in Many States

SACRAMENTO – The trauma of foreclosure or impending foreclosure has hit home for nearly 1.4 million homeowners so far this year, maintaining the nearly 91 percent year to date increase versus the last year. That’s according to the latest numbers from California-based ForeclosureS.com, which has been analyzing and publishing real estate and foreclosure data for more than 15 years.

For the month of October nationwide 54,418 REO (Real Estate Owned by lenders, newly foreclosed homes) filings were reported to ForeclosureS.com (up nearly 24 percent over the 43,941 September filings). A total of 128,019 pre-foreclosure filings were reported for October (up nearly 31 percent over 97,984 September’s filings).

These are grim numbers for the hundreds of thousands of homeowners trapped by rising mortgage payments, stagnant home prices, and tightened credit markets. “But all is not gloom,” says Alexis McGee, president of ForeclosureS.com, and author of “The Foreclosures.com Guide to Investing: Making Huge Profits Investing in Pre-Foreclosures Without Selling Your Soul” (John Wiley, 2007).

“However, remember that in September nationwide both REO filings (43,941 versus 55,952) and pre-foreclosures filings (97,984 versus 117,694) were down over August (16.75 percent and 21.47 percent respectively). When you average September and October filings, you find that pre-foreclosure filings have actually leveled off (down 4 percent) since August (113,001 current versus 117,694 August) and REO’s have actually dropped significantly (down 12 percent) from the high August filings (49,179 current versus 55,952 August).”

“Although tens of thousands of other homeowners are “in foreclosure” most have not lost their home to foreclosure, as they have found solutions to their mortgage woes, ranging from workouts through lenders or other private and public organizations to rising home prices that make refinancing and home sales plausible, and growing local and national economies,” adds McGee. “

Just last week, the U.S. Commerce Department reported the nation’s economy grew at a faster than expected 3.9 percent in the third quarter. Combine that with the 3.8 percent second-quarter GDP, and our economy is experiencing the strongest national growth rate in four years. And the Labor Department just reported that the economy turned out 166,000 new jobs in October vs. the 80,000 consensus forecasted. All that has happened under the cloud of the subprime mortgage industry meltdown!”

No matter the hype you hear the pattern of foreclosure and pre-foreclosure filings that climb month in and month out in every state has been broken, says McGee. “Overall national foreclosure-related numbers may sound high, but the 91 percent year over year increase is in relation to historic base lows. In addition, every month there’s a bit of good news on the foreclosure front. Individual states and regions are reporting flat or dropping numbers of foreclosure and pre-foreclosure filings. That’s sometimes a tough-to-see reality amid what can be overwhelming numbers. For some areas the worst of the foreclosure crisis could be over,” adds McGee.

On a regional basis in October versus September, ForeclosureS.com reports REO filings (homes actually lost to foreclosure) were:

• Southeast: Up 22 percent (13,754 October vs. 10,726 September vs. 12,588 August);
• Southwest: Up 21 percent (23,717 October vs. 18,649 September vs. 21,286 August);
• Midwest: Up 17 percent (13,731 October vs. 11,445 September vs. 13,608 August);
• Other States: Up 12 percent, which include Alaska, Hawaii, Idaho, Montana, and Utah (657 October vs. 576 September vs. 5,571 August);
• Northeast: No change (2,559 October vs. 2,545 September vs. 2,899 August).

“Worth repeating: Although October REO filings look high compared to September, when September and October filings are averaged you will see that overall REO filings have dropped significantly (12 percent) from August levels” adds McGee.

On a per-capita basis year-to-date REO filings nationally and regionally are up (except in the Other States region), according to analysis of ForeclosureS.com’s data base of more than 3.5 million listings. But some states—including a few that have in the past been hard-hit by foreclosures-- actually have fewer homeowners per capita that have lost their homes to REO foreclosure so far this year. Those states are:

• Colorado (10.4 REO filings for every 1,000 households this year so far vs. 18.9 in the same period a year ago).
• Tennessee (7.2 filings per 1,000 households year to date compared with 8.3 a year ago).
• Indiana (10.1 filings so far this year vs. 10.5 per 1,000 households during the same time 2006).
• Pennsylvania (2.6 filings per 1,000 year to date compared with 3 filings per 1,000 the same time a year ago).
• Oklahoma (6.4 filings per 1,000 households so far this year vs. 7.4 a year ago).
• South Carolina (4.2 filings for every 1,000 households year to date vs. 5.7 the same time period a year ago).
• Utah (2.7 filings per 1,000 households this year vs. 4.9 a year ago).
• Massachusetts (statistically insignificant numbers of filings this year vs. 0.2 filings per 1,000 households during the same time last year).
• North Carolina (unchanged at 6 REO filings for every 1,000 households).

On a regional basis in October versus September, ForeclosureS.com reports pre-foreclosure filings (homes in foreclosure, but not lost to) were:

• Southeast: Up 39 percent (39,976 October vs. 24,361 September vs. 33,998 August);
• Other States: Up 37 percent, which include Alaska, Hawaii, Idaho, Montana, and Utah (1,932 October vs. 1,212 September vs. 1,607 August);
• Midwest: Up 20 percent (16,666 October vs. 13,380 September; 16,734 August);
• Southwest: Up 17 percent (53,002 October vs. 43,923 September; 50,075 August);
• Northeast: Up 8 percent (16,443 October vs. 15,108 September vs. 15,279 August);

“Reminder: Although October pre-foreclosure filings look high compared to September, when September and October filings are averaged you will see that overall pre-foreclosure filings have leveled off (down 4 percent) from August levels” adds McGee.

All pre-foreclosures, however, do not end up as foreclosures, reminds McGee. “Don’t believe all the dire talk and hype about foreclosures coming out of Washington, D.C., either,” says McGee. “A lot of it includes exaggerated and misleading numbers.”

For example, one recent congressional report talks about 2 million more households that will be lost to foreclosure in the next two years and that those homes represent about $100 billion in housing wealth. Jay Brinkman, vice president of research and economics for the Mortgage Bankers Association last month called those numbers a big exaggeration.

“Even if those numbers were true—and they’re not,” adds McGee, “$100 billion is small when you consider that the outstanding total U.S. mortgage debt is approximately $10 trillion.”

Looking closer at more October filing numbers from ForeclosureS.com:

• Top 10 States pre-foreclosure filings by per-capita this year (though October):

• Nevada leads the nation in actual number of pre-foreclosure filings and per capita so far this year-- 40.5 pre-foreclosures filings per 1,000 households or 30,276 filings, up a whopping 106.63 percent over last year.
• Top 10 Counties pre-foreclosure filings by number of filings this year:

• Top 10 Counties pre-foreclosure filings by per-capita this year:

• Top 10 States REO filings by per-capita this year (though October):

• Nevada with 14.5 REO filings per 1,000 households in the state (10,672 filings); Elko County leads their state in filings per capita--38.9 filings per 1,000 households (608 filings), down 24.02 percent from a year ago.
• Top 10 Counties REO filings by number of filings this year:

• Top 10 Counties REO filings by per-capita this year:

To get the details of what’s happening with foreclosures and housing markets in your state, region, and county, including year-to-date and month-to-month comparisons per capita and in filing numbers, please visit http://www.ForeclosureS.com/www/pages/pressinquiry.asp.

The Truth about Foreclosure Investing: Check your favorite book source for Alexis McGee’s new book: The ForeclosureS.com Guide to Investing in Pre-foreclosures Without Selling Your Soul, John Wiley and Sons (paperback), and coming soon is McGee’s second book, The Foreclosures.com Guide Advanced Investing Techniques You Won't Learn Anywhere Else (Wiley, Spring 2008).

Media Contact:

Sofia Gutierrez, ForeclosureS.com, 916-860-1190 or sofia@halldinpr.com