Inquiring minds are seeing red…lots of it, as foreclosures soar. Yahoo News is reporting that foreclosures are up 25% for the year. The numbers are truly ugly:
Lenders took back more homes in August than in any month since the start of the U.S. mortgage crisis.
The increase in home repossessions came even as the number of properties entering the foreclosure process slowed for the seventh month in a row, foreclosure listing firm RealtyTrac Inc. said Thursday.
In all, banks repossessed 95,364 properties last month, up 3 percent from July and an increase of 25 percent from August 2009, RealtyTrac said.
August makes the ninth month in a row that the pace of homes lost to foreclosure has increased on an annual basis. The previous high was in May.
And concern is growing:
Banks have been stepping up repossessions to clear out their backlog of bad loans with an eye on eventually placing the foreclosed properties on the market, but they can’t afford to simply dump the properties on the market.
Concerns are growing that the housing market recovery could stumble amid stubbornly high unemployment, a sluggish economy and faltering consumer confidence. U.S. home sales have collapsed since federal homebuyer tax credits expired in April.
That’s one reason fewer than one-third of homes repossessed by lenders are on the market, said Rick Sharga, a senior vice president at RealtyTrac.
“These (properties) are going to come to market, but very slowly because nobody wants to overwhelm a soft buyer’s market with too much distressed inventory for fear of what it would do for house prices,” he said.
And one reoccurring problem is very frightening…that banks are increasingly slowing the initiation process into foreclosure for homes behind in their mortgage:
As a result, lenders are putting off initiating the foreclosure process on homeowners who have missed payments, letting borrowers stay in their homes longer.
The number of properties receiving an initial default notice — the first step in the foreclosure process — slipped 1 percent last month from July, but was down 30 percent versus August last year, RealtyTrac said.
Initial defaults have fallen on an annual basis the past seven months. They peaked in April 2009.
So, if taken at face value, this seems like a good thing that properties going into foreclosure are declining. However, the invisible killer is that the banks are just not pursuing the process, not that fewer households are falling behind.
The story also notes that the top five states with respect to foreclosure rates:
Interestingly, Nevada didn’t make the top ten.
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