In the first quarter, the number of foreclosures increased 24 percent from a year earlier, reported RealtyTrac today. One in every 159 homes received a foreclosure notice in the first quarter. RealtyTrac includes bank repossessions, default notices and auction sale notices in the foreclosures it tracks.
Foreclosure notices were made on 803,849 properties in the first quarter, up 9 percent from the fourth quarter of 2008.
March saw a 17 percent increase in foreclosures from February and a 46 percent increase from a year earlier.
The first quarter and March numbers were the highest since RealtyTrac began tracking this data, in January 2005.
“In the month of March we saw a record level of foreclosure activity — the number of households that received a foreclosure filing was more than 12 percent higher than the next highest month on record. Since much of this activity was in new foreclosure actions, it suggests that many lenders and servicers were holding off on executing foreclosures due to industry moratoria and legislative delays,” said James J. Saccacio, chief executive officer of RealtyTrac. “It’s also likely that the drop in REO activity can be attributed to these processing delays, rather than to any of the foreclosure prevention programs currently in place. It’s very likely that we’ll see the number of REOs increase again now that most of the moratoria have been lifted.
“On a positive note, it appears that demand is up in some of the harder-hit areas, particularly on bank-owned REO properties that first time homebuyers and investors see as bargains,” Saccacio continued. “But it’s unlikely that this increased demand will be enough to offset the growing number of foreclosures in the pipeline, accelerated by rising unemployment rates.”
I recently interviewed a Birmingham (Ala.)-area realtor who specializes in REOs – she echoed what Saccacio said. She expects many more foreclosures to come on the market because the federal moratorium on foreclosures is ending. She said it’s a lot harder for buyers in her area to get loans because bank underwriting is taking a lot longer. That means that banks are checking all documentation when mortgage borrowers apply for loans. Gone are the days when you could get a mortgage by simply verbally stating how much money you make.
She works on REOs from start to finish – she said she’s the one to do evictions. Many foreclosures have a lot of damage because homeowners take appliances on their way out or strip copper – all in an effort to pick up some extra cash. She said they have a cash for keys program where when she picks up the keys, she gives homeowners $1,000 to not damage the property.
Here’s a list of the 10 states with the highest rates of foreclosures in the first quarter:
- Nevada – up 19 percent from 4Q2008; up 111 percent from a year earlier
- Arizona – up 6 percent from 4Q2008; up 79 percent from a year earlier
- California – up 35 percent from 4Q2008; up 36 percent from a year earlier
- Florida – down 12 percent from 4Q2008; up 36 percent from a year earlier
- Illinois – up 32 percent from 4Q2008; up 68 percent from a year earlier
It’s important to note that just because a state has a high rate of foreclosure that may not mean that it has a higher number of foreclosures.
The five states that account for 60 percent of all foreclosures are California, Florida, Arizona, Nevada and Illinois.
May 13, 2009