Foreclosures Up 157% From Same Month Last Year

Foreclosures are up significantly from August 2005. The leading states are NV, CA, and FL. What bothers most me is that most is that the dollar value of REO (or OREO) property held by banks is up 85%. Secondly, based on this information it looks like this housing slump could stretch beyond 2010 and possibly into 2011 or 2012. From Bloomberg:

The number of Americans who may lose their homes to foreclosure more than doubled in August from a year earlier as subprime borrowers with adjustable-rate mortgages saw their monthly payments rise, RealtyTrac Inc. said.

Lenders sent notices of default or the equivalent to 108,716 homeowners in August, up from 42,144 in August 2006, RealtyTrac said today (Tuesday). It was the highest recorded in a study that goes back to 2005. California led with 41,714 notices and Florida was second with 26,203.

The U.S. economy may stumble as the two-year housing decline worsens amid the surge in foreclosures and the collapse of more than 100 mortgage companies. . . . .

. . . . ``This is just the beginning of a wave of new foreclosures,'' Rick Sharga, executive vice president of marketing for RealtyTrac in Irvine, California, said in an interview. ``There are lots of people who bought homes they could only afford at the teaser rates, and now have very few options.''

Adjustable-rate mortgages to subprime borrowers account for 7.3 percent of all home loans and 44 percent of all new foreclosures, according to Mortgage Bankers Association in Washington. The 15 percent of all mortgages that are prime adjustable-rate loans -- granted to borrowers with good credit histories -- represent 15 percent of new foreclosures, the bankers' group said Sept. 6.

The total number of U.S. foreclosure filings, including defaults, scheduled auctions and bank repossessions, rose 115 percent to a record 243,947 in August from a year earlier, RealtyTrac said in its report. The total foreclosure filing number can double- or triple-count homes in default if they have more than one legal filing against them in a month.

Nevada had the highest U.S. rate, with one foreclosure filing for every 165 homes, three times worse than the national average of one for every 510 properties. California was No. 2 with one filing per 224 households and Florida had the third-highest rate.

U.S. banks reported owning residential property valued at $4.24 billion in the second quarter, typically houses and condominiums seized in foreclosures, according to the Federal Deposit Insurance Corp. That's up from $2.29 billion a year earlier.

Defaults on subprime mortgages will continue driving up foreclosures through 2009, Sharga said, citing pending interest hikes on adjustable-rate loans homeowners took out in 2005 and 2006.

``There are probably two more major resets -- one next year, and the other in early 2009,'' Sharga said. ``If lenders raise their standards too high, and people can't refinance out of bad loans, it will only make matters worse.'' (my emphasis)