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Foreclosures set U.S. record, but N.C. picture improves

Posted January 14, 2010

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— A record 2.8 million households were threatened with foreclosure last year, and that number is expected to rise this year as more unemployed and cash-strapped homeowners fall behind on their mortgages.

The number of households that received a foreclosure-related notice rose 21 percent from 2008, RealtyTrac Inc. reported Thursday. One in 45 homes were sent a filing, which includes default notices, scheduled foreclosure auctions and bank repossessions.

However, in North Carolina, the number of foreclosures declined in 2009 from totals recorded in 2008 and 2007, according to RealtyTrac data. North Carolina had passed legislation to help delay foreclosures in 2008.

For 2009, 28,384 properties were involved in a foreclosure proceeding. That equates to 0.69 percent – or one in every 145 – of all properties.

The total is a decline of 16 percent from 2008 and 2.5 percent from 2007, RealtyTrac reported.

In December, more than 349,000 households, or one in 366 homes, were hit with a foreclosure-related notice. That represents a 14 percent spike from November and a 15 percent jump from December 2008.

Banks repossessed more than 92,000 homes, up 19 percent from November. That increase was likely due to lenders working to clear their books at the end of the year, RealtyTrac said.

Stemming the tide of foreclosures is an important step for the real estate market and the economy to recover. Because foreclosures are usually sold at heavy discounts they can lower the value of surrounding properties.

Cities lose property tax dollars from empty foreclosures and declining home values, straining local economies. Home prices have stabilized in some cities, but are still down 30 percent nationally from mid-2006.

The foreclosure crisis isn't letting up. Between 3 and 3.5 million homes are expected to enter some phase of foreclosure this year, said Rick Sharga, senior vice president of Irvine, Calif.-based RealtyTrac, which began tracking the data five years ago.

High foreclosures forced the federal government and several states to come up with plans to prevent or delay foreclosures to help troubled borrowers.

"It was bad, but it could have been much worse, and it probably should have been worse," Sharga said.

One plan intended to help homeowners is the Obama administration's loan modification program known as Making Home Affordable. Lenders participating in the program have offered trial loan modifications to 760,000 eligible borrowers since it was launched in March.

A loan modification changes the terms of the loan, such as lowering the interest rate, to make the monthly payments more affordable.

As of November, just 31,000 of them had been made permanent. Nearly the same number had dropped out of the program or were found to be ineligible. The Treasury Department will release updated figures Friday.

Economic issues, such as unemployment or reduced income, are expected to be the main catalysts for foreclosures this year. Homeowners with good credit who took out conventional, fixed-rate loans are the fastest growing group of foreclosures.

The Mortgage Bankers Association on Wednesday recommended changes to the government's program to account for borrowers who've lost their jobs. The program, for example, should include a suspension of payments as the first step for borrowers with a temporary loss of income.

The government also should refrain from "endless incremental program changes," the trade association said.

Since April 2009, there have been nine instances where new program requirements were released, and more than 90 clarifications for new or revised forms, reporting changes and policies. The changes forced mortgage companies to implement new procedures and retrain employees, taking away time that could be spent helping borrowers.

The same three states that led the nation in foreclosure rate in December also posted the highest rates for the entire year: Nevada, Arizona and Florida. More than 10 percent of Nevada housing units received at least one foreclosure filing in 2009, with Florida and Arizona following with about 6 percent each.

The other states ranked in the top 10 for the year were California, Utah, Idaho, Georgia, Michigan, Illinois and Colorado.

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  • concerncitizen Jan 14, 2010

    grandpeople, I agree. Both Republican and Democratic mid class Americans need to take back our country. Refuse to go back to buying on credit, save money in the banks, refuse to give all our money to wall street and the federal goverment......

  • jeannas Jan 14, 2010

    As a licensed Realtor, the circumstances are very varied as to why folks lose their homes. What I see range from: they overbought for their budget(which agents tell them NOT to do) and then there's the horrific job losses and/or health issues pertaining to job losses. Either way it's detrimental to the housing market. The ones that are the most aggravating are the ones that took the 100% financing and then destroy the homes so that the banks have trouble reselling them.....Sad on all accounts!

  • wcnc Jan 14, 2010

    When you agree to a mortgage that you can't afford or you qualify for a mortgage based on 2 salaries, you are headed for disaster. If you have an affordable mortgage and qualified on 1 income and crisis comes, banks will usually work with you. They won't work with stupidity, though.

  • gcmann Jan 14, 2010

    emailcdb -

    from $1179 a month to $1455 a month ?? And that is supposed to be a good deal ? That's Wall St thinking for you

    What many people are doing now are fighting back with their dollars. They are moving all their money out of large Wall St. banks and into Credit Unions and smaller banks. I have, and I'm getting much better interest rates. Credit Unions aren't strapped by having to pay out billions of dollars in bonus money for executives - bonuses given regardless of performance.

  • See Dee Bee Jan 14, 2010

    we live here in Raleigh. 14 months of unemployment - so we applied and qualified for "Making homes affordable"... Bank of America decided that the best way to make our home more affordable was to increase our payment - from $1179 a month to $1455 a month.

    Do they really wonder why there are foreclosures and homeowners dropping out of the program?

    Clueless!

  • colliedave Jan 14, 2010

    Cities lose property tax dollars from empty foreclosures and declining home values,

    Home prices are not always related to assessed values. Some times they are much above, in a market such as ours, the assessed values are much higher than what the market will bear,

  • gcmann Jan 14, 2010

    Here's something that the media and our elected officials don't want to address, and it's the root cause of the US's high unemployment rate. Stop importing cheaper lesser skilled foreign workers on these sham visas such as the H-1B, L1, (and a dozen others). Over 20 million foreign workers have been imported on these visas since corporate America payed our congress to enact the American corporation's will. That's 20 million American workers displaced, or more correctly, fired. Even in this time of economic crisis corporations are continuing to import cheaper lesser skilled workers and outsource even more jobs. Some tech companies are moving all their R&D to communist china (big blue 3 letter corporation is the worst offender). Communist china is not the US's friend and these corporations are giving away the shop. And people wonder how china can hack into US vital systems so easily. Visit americanworker.org or numbersusa.com

  • whatelseisnew Jan 14, 2010

    I hope the foreclosures keep rising. Lots of money to be made on this situation.

  • Go GT Jan 14, 2010

    and yet our president is looking for more money to fund a war we do not need and a healthcare reform that is a disaster. Not to mention telling the whole world we will help Haiti in their time of need- what about OUR time of need?

  • Gatsby Jan 14, 2010

    But the MSM tells us that everything is getting better...That the "recovery" is full steam ahead & bubbles will begin to blow just like it was 2006 again.
    I think its closer to the truth to say the bottom has not been reached yet.

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