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N.C. foreclosures surge nearly 15 percent in May as national rate also soars

Posted June 13, 2008

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— North Carolina foreclosure activity soared 14.7 percent in May from a month earlier, with close to 3,800 properties facing some sort of legal action, according to the latest statistics from real estate industry tracking firm RealtyTrac.

The surge also was a 23.5 percent increase from May of 2007.

However, ratio of one action for every 1,064 properties did ranked North Carolina 26th in foreclosure activity. North Carolina is the 10th-largest state in population.

Nationally, the foreclosure picture worsened even more, with legal filings up nearly 50 percent compared with a year earlier, RealtyTrac noted.

Across the country, 261,255 homes were the targets of at least one foreclosure-related filing in May, up 48 percent from 176,137 in the same month last year and 7 percent from April, RealtyTrac Inc. said.

One in every 483 U.S. households received a foreclosure filing in May, the highest number since RealtyTrac started the report in 2005 and the second straight monthly record.

Foreclosure filings increased from a year earlier in all but 10 states. Nevada, California, Arizona, Florida and Michigan had the highest statewide foreclosure rates.

Metropolitan areas in California and Florida accounted for nine of the top 10 local areas with the highest rate of foreclosure. That list was led by Stockton, Calif. and the Cape Coral-Fort Myers area in Florida.

Irvine, Calif.-based RealtyTrac monitors default notices, auction sale notices and bank repossessions. Lenders nationwide repossessed nearly 74,000 properties in May, while more than 58,000 owners received default notices, the company said.

In Nevada, one in every 118 households received a foreclosure-related notice last month, more than four times the national rate. In California, one in every 183 households faced foreclosure.

The combination of weak housing sales, falling home values, tighter mortgage-lending criteria and a slowing U.S. economy has left financially strapped homeowners with few options to avoid foreclosure. Many can't find buyers or owe more than their homes are worth and can't get refinanced into an affordable loan.

Making matters worse, mortgage rates have been rising, reflecting increased concerns about what the Federal Reserve might do to battle inflation. Freddie Mac, the mortgage company, reported Thursday that 30-year fixed-rate mortgages averaged 6.32 percent this week, the highest level in nearly eight months and up sharply from 6.09 percent last week.

Efforts by government and the mortgage industry to stem the tide of foreclosures aren't keeping up with the rising number of troubled homeowners, and critics say a Bush administration-backed mortgage industry coalition, dubbed Hope Now, is falling far short.

Rick Sharga, RealtyTrac's vice president of marketing, said foreclosures are unlikely to peak until sometime this fall, as more loans made to borrowers with poor credit records reset at higher levels. "I don't think we've seen the high point," he said.

About 50 to 60 percent of borrowers who receive foreclosure filings are likely to lose their homes, Sharga said. The rest probably will be able to sell or refinance.

A new government report released Wednesday found that among mortgages held by Bank of America, Citigroup Inc. and seven other large banks, foreclosures climbed to 1.23 percent of all loans in March from 0.9 percent in October.

As foreclosed properties pile up, they add to the inventory of homes on the market and drag down home prices. The trend is most dramatic in many parts of California, Florida, Nevada and Arizona, where prices skyrocketed during the housing boom and are now falling precipitously.

Sales of foreclosures, vacant new homes and other distressed properties now dominate some markets, causing grief for individual homeowners who need to sell for other reasons, like a job in a new city.

Nationwide, one out of every four sales between January and March was a distressed sale, and that figure jumps to more than 50 percent in the hardest-hit areas like Las Vegas, Detroit and distant suburbs of Los Angeles, according to Moody's Economy.com.

In some neighborhoods, lenders are slashing prices dramatically to rid themselves of an unprecedented number of foreclosed properties, sparking bidding wars and multiple offers.

While that's a positive for the real estate market, buyers in other parts of the country are still holding back.

"I think a lot of people are waiting to see if we really have hit the bottom," Sharga said.

Lehman Brothers economist Michelle Meyer said in a report Thursday that U.S. home sales are likely to hit bottom at the end of this summer, but she said a recovery in sales is likely to be "feeble." Home prices, she wrote, are still expected to fall another 10 percent by the end of 2009.

36 Comments

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  • bosoxbaby Jun 13, 2008

    BigCheese....have you ever worked in insurance, the mortgage industry, or as a realtor??

    I used to have that same mentality but after working in two of the three industries (insurance and mortgage)....most are not crooks and the industries are heavily regulated on both the state and federal levels. Not saying that there aren't some bad apples out there but that's no different than any other business. Don't do the blanket statements like that please...we're not all crooks or getting fat wallets off folks that "can't afford it".

  • tmedlin Jun 13, 2008

    the Admiral is right...too many people want to blame someone else for their problems instead of looking into the mirror...the "victim" mentality...

  • TheAdmiral Jun 13, 2008

    "Don't buy a house you can't afford.

    Don't get a mortgage based on both spouse's salaries. If you do and one loses their job, you can't afford that payment!!

    Don't buy a house with no money down. Any downturn in the market puts you in a negative equity situation."

    I bought a house on my salary that was 5 times what my salary was with no money down and I don't have a problem paying the mortgage.

    The ones who have 100 credit cards have the problem.

  • BIGCHEESECAMATO Jun 13, 2008

    Most Realtors are crooks. Just like those at "Pay-Day" Lenders, Quick for Cash, Insurance Agents and Morgage People. They always try to fatten their pockets and act really fancy and everything and still go to church each Sunday. (Praying for their place in Heaven) always Suck@ring someone into something bigger than they can afford. Where are all those "butter-ball" Realtors at now....Hawaii or Cancun

  • daMoFo Jun 13, 2008

    Sure the "greedy" lenders are to blame. And the dog ate my homework. Lenders lend money. It's up to the borrower to decide to take the loan. Of course that would mean personal responsibility and that no longer exists in the USA.

    When we bought our last house 4 years ago, we bought less house so we could go with a flat rate mortgage and make a 10% down payment. Very few of these foreclosures are due to job losses and unemployment is still historically low.

    Buyers got "greedy" and thought they found another quick way to make an easy buck flipping a house. They took ARM's, no money down, most expensive houses they could find. They gambled and lost. Now let them deal with it.

  • penny for your thoughts Jun 13, 2008

    horseonthefly - First Citizens bank sent my wife and I credit cards that draw on our home equity line as well. We did NOT ask for these, and did not know they were available even. We shred them and called the bank to cancel. We don't do business with them at all anymore (canceled the line of credit too!). Anyhow, as bad as this is - if the dumb idiots of the world weren't using things like this, the banks wouldn't be sending them. It may be like the question "which came first the chicken or the egg?" But BOTH the banks and the consumers are equally to blame. Nobody held a gun to somoene's head to use these things or sign off on these outrageous loans!

  • gopack54 Jun 13, 2008

    These same realtors that talked people into buying way beyond their means are the same people that are going to spend $10M to defeat the land transfer tax. Kind of like putting the inmates in charge of the prison.

  • wcnc Jun 13, 2008

    This "crisis" lands solely on the people who signed a contract without reading it or without getting an explanation of it from the real estate lawyer they paid for at closing.

    Don't buy a house you can't afford.

    Don't get a mortgage based on both spouse's salaries. If you do and one loses their job, you can't afford that payment!!

    Don't buy a house with no money down. Any downturn in the market puts you in a negative equity situation.

    Put all of the no-no's together and you have a recipe for disaster- all caused by the homeowner's poor choices.

  • wcnc Jun 13, 2008

    "A person making 175,000.00 a year is easily within their means to by a 200,000 house. However supposes in a year or two that person has been laid off and is now only making 60,000 a year."

    Someone making $175k a year should have tens of thousands of dollars in savings that would still allow them to make house payments if their salary decreased to 60K...... PLus a $200K house on a salary of $175K is a mortgage payment that doesn't make a dent in that salary.

    Now, if that person has huge debt, that's another story!! No one with huge debt should have a mortgage.

  • colliedave Jun 13, 2008

    The home prices in California were WAY over valued. Just a market correction.

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