Foreclosures Rose 48% in May as U.S. Bank Reposessions More than Doubled

[marmar]

from Bloomberg:



Foreclosures Rise 48% in May as Repossessions Double (Update1)

By Bob Ivry

June 13 (Bloomberg) -- Bank repossessions more than doubled in May and foreclosure filings rose 48 percent from a year earlier as previously foreclosed properties dragged down housing prices, trapping borrowers in mortgages they couldn't afford, RealtyTrac Inc. said in a report today.

One in every 483 U.S. households either lost the home to foreclosure, received a default notice or was warned of a pending auction, RealtyTrac said. That was the highest rate since the Irvine, California-based company began reporting in January 2005 and the 29th consecutive month of year-over-year increases. Nevada, California and Arizona posted the highest rates in the U.S. and New Jersey entered the top 10.

``It's definitely a different kind of market than what we got used to a couple years ago,'' said Devin Reiss, owner of Realty 500 Reiss Corp. in Las Vegas. ``We used to sell homes in a day. Now 50 percent of our sales are foreclosures.''

Foreclosures add to inventory and crowd out regular sales, Michelle Meyer and Ethan Harris, economists at Lehman Brothers Holdings Inc. in New York, wrote in a report yesterday. Foreclosures will account for 30 percent of national home sales this year as 1.2 million foreclosed single-family homes will eventually enter the market, they said. They estimate foreclosed properties, which typically sell for about 20 percent less than other homes, will depress home prices nationally by 6 percent.

Feedback Loop

``The risk is that an adverse feedback loop will develop, in which problems in the housing market undercut the economy, causing even more stress in the housing and mortgage markets,'' Meyer and Harris wrote.

The percentage of all U.S. homes in some stage of foreclosure in the first quarter was 2.47, the Washington-based Mortgage Bankers Association reported. The average over the last 30 years has been 0.98 percent, the industry group said.

A homeowner usually receives a notice of default after falling more than 90 days behind on mortgage payments. If the borrower still doesn't pay what's owed, the property is sold to the highest bidder at an auction, typically held at a county courthouse. If bids don't reach a set amount, the lender takes ownership. Such houses are referred to as REO, or ``real estate- owned.'' .....(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601087&sid=aexLG6Bdlf8g&refer=home

[lonestarnot]

1. Ack. The march to nothingness continues.

[Supersedeas]

2. and there are more....many more to come.

[ljm2002]

3. Amazing...

...the banks just keep going through their bureaucratic procedures, not giving any quarter to struggling homeowners, and the end result is they are cutting off their noses to spite their faces, as the whole thing comes crashing down.

What people refuse to recognize is this is the result of a basically dysfunctional system. It reminds me of once several years ago when I read that some large percentage of families were dysfunctional -- well over half. It occurred to me then, that if over half of your families are "dysfunctional" -- doesn't that imply that in fact your society is dysfunctional? And in this case with housing, it seems that they will not recognize the big picture until half of us are out on the street. Maybe that's what it will take for people to say hmm, maybe we need a change in the basic way our system is set up.

The scariest part for me is that our standing in the international financial markets has taken a beating, as well it should. Basically, U.S. financial institutions perpetrated a giant fraud by packaging up these debts as though they were much more valuable and less risky than they really are. Which could have worked, if things held together and the high risk never materialized. Unfortunately, the risk materialized in a big way, and lots of money was lost as a result. In financial markets, being caught out in a fraud like that is deadly, because these markets rely on trust. I think we have only begun to see the effects...