Situation worsens despite efforts to help borrowers manage payments
LOS ANGELES – THE number of United States homes facing foreclosure jumped 57 per cent last month compared to a year ago, with lenders increasingly forced to take possession of homes they could not unload at auctions, a mortgage research company said.
Across the US, 233,001 homes received at least one notice from lenders last month related to overdue payments, compared with 148,425 a year earlier, RealtyTrac said on Monday.
Nearly half of the total involved first-time default notices.
The worsening situation came despite ongoing efforts by lenders to help borrowers manage their payments by modifying loan terms, working out long-term repayment plans and other actions.
‘You have more people going into default and a higher percentage of the properties going back to the banks,’ said Mr Rick Sharga, RealtyTrac’s vice-president for marketing.
The US foreclosure rate last month was one filing for every 534 homes. The tally represented an 8 per cent hike from December.
Lenders typically consider borrowers delinquent after they fall three months behind on mortgage payments.
Attempts to help struggling home owners have fallen short.
‘The loan workout modification programmes aren’t having a significant material effect on keeping properties from going back to the banks,’ Mr Sharga said.
One dramatic trend last month was a 90 per cent spike in the number of properties that were repossessed by banks, compared to January last year.
‘It suggests that there’s little or no equity in a lot of these homes, because they are not even being sold to investors at auctions, and it suggests a continuing weakness in a lot of markets in terms of real estate sales,’ Mr Sharga said.
Falling home values and tighter lending standards have extended the housing slump, making it tougher for home owners unable to sell their homes or refinance when they face mortgage payments they cannot afford.
A wave of adjustable rate mortgage resets expected in May and June threatens to push many other home owners into default.
During the past year, 30 states saw an increase in the number of homes that had received at least one filing.
ASSOCIATED PRESS (Source: The Straits Times 27 Feb 08)