US foreclosure activity surges 23% in third quarter/More Illinois homeowners falling into foreclosure

US foreclosure activity surges 23% in third quarter
By Alan Rappeport in New York
Copyright The Financial Times Limited 2009
Published: October 15 2009 13:01 | Last updated: October 15 2009 13:01
http://www.ft.com/cms/s/0/6a9a9e5c-b907-11de-98ee-00144feab49a.html


Foreclosure activity among US properties rose to the highest level on record in the third quarter, as bold government stimulus measures failed to keep homeowners from defaulting.

Default notices, auction sales and bank repossessions jumped by five per cent from the second quarter to the third quarter and were up by 23 per cent year-on-year, according to RealtyTrac. That was the highest quarterly increase since the foreclosure tracking company started keeping records in 2005.

In spite of the sharp quarterly increase, foreclosure filings eased in September for the second month running. However, the total of 937,840 filings was the third highest monthly number on record.

“Lenders may be starting to work through some of the pent-up foreclosure inventory caused by legislative delays, loan modification efforts and high volumes of distressed properties,” James Saccacio, RealtyTrac’s chief executive, said in a statement.

Nevada, Arizona and California had the highest rates of foreclosure in the third quarter. They were among six states which accounted for 62 per cent of all foreclosure filings in the US.

In Nevada, which was among the states hit hardest by the implosion housing bubble, one of every 23 houses received a foreclosure filing.

Record rates of foreclosure continue to be the biggest obstacle facing the housing recovery. Analysts argue that foreclosures are likely to top 2m during the next year, keeping prices low into 2010.

The US government, which has already offered hefty incentives to lenders to encourage modifications of mortgages in a $75bn effort to combat the foreclosure problem, is currently wrestling with the idea of extending the $8,000 first-time home buyer tax credit. But some economists argue that the foreclosure problem must be dealt with more directly.

“If the prevailing pressure on the housing market is the result of foreclosures on current owners, initiatives that are designed to spur demand are misdirected,” chief economist at Real Estate Econometrics. “Given the need for careful management of the public purse, available resources should be directed squarely at the challenge of foreclosures.”




More Illinois homeowners falling into foreclosure - New default notices were up in September, but overall filings dropped from August
By Mary Ellen Podmolik
Copyright © 2009, Chicago Tribune
October 15, 2009
http://www.chicagotribune.com/classified/realestate/chi-thu-foreclosures-1015-oct15,0,4212972.story


The number of homeowners receiving default notices -- the first step in the foreclosure process -- continued to rise in Illinois last month, a bad omen for the state's housing industry and economy.

Lenders filed initial court documents last month against 7,174 Illinois homeowners whose mortgages were delinquent, according to data scheduled to be released Thursday by RealtyTrac. That compares with 6,892 filings in August and 6,770 filings in June.

Altogether last month, some 12,771 Illinois homeowners received some sort of foreclosure filing, which can include initial notices of default, notices of a sheriff's sale of the property or a notice that the lender has taken possession of the home.

The overall Illinois number, which is down 2.35 percent from August, remains 25 percent higher than in September 2008, said RealtyTrac, an online marketplace of foreclosed properties.

"We're seeing a shift in the types of areas that are being hit by foreclosure," said Daren Blomquist, RealtyTrac spokesman. "Now we're seeing the highest rates in some of those collar counties."

For instance, while third-quarter, year-over-year foreclosure filings rose 6 percent in Cook County, they were up 693 percent in Kendall County; 103 percent in Kane County; and 169 percent in DeKalb County.

"It started out with people in subprime loans," said Bob Palmer of Housing Action Illinois. "Now it's just being compounded by people that are suffering because of the economic crisis and can't pay their mortgage."

The federal government said last week that its Home Affordable Modification Program had met its initial target of 500,000 trial modifications a month ahead of schedule.

Palmer said, however, that it won't be known for several months whether those trial modifications stick and are turned into permanent modifications or whether the borrowers re-default on the loans.

Earlier this week, Jay Brinkmann, chief economist of the Mortgage Bankers Association, predicted that foreclosures would peak by the end of 2010.

mepodmolik@tribune.com