August foreclosures at 358471, more defaults expected
“The August report demonstrates that there is still an ample supply of properties filling the foreclosure pipeline even while the outflow of bank-owned REO [real-estate owned] properties onto the resale market is being more carefully regulated,” RealtyTrac Chief Executive Officer James Saccacio said in a statement.
Despite a surge in demand in the U.S. housing market after a three year slump, foreclosures are not abating.
The foreclosures are largely related to unemployment. With the unemployment rate at a 26-year high (9.7 percent), many home owners have defaulted on mortgage payments.
Davis, a former Federal Reserve Board economist, was quoted by Bloomberg as saying, “As long as 15 million Americans are unemployed, record foreclosures will continue.”
Nevada witnessed the highest foreclosure rate last month with one in every 62 homes receiving a filing. Though there is an 8.4 percent drop in the number from July, foreclosures were up 53 percent from August last year.
Next highest foreclosure rate was reported in Florida where one in every 140 households receiving a filing. Others in the top ten states for foreclosure filings were California, Arizona, Michigan, Idaho, Utah, Colorado, Georgia and Illinois.
A 9.6 percent drop in default rate has helped Arizona lower its foreclosure rate to fourth-highest in August from third-highest in July.
More foreclosures underway
In an effort to prevent foreclosures, the administration has launched Making Home Affordable program. Under the program, lenders are paid to reduce borrowers’ monthly installments.
Though a number of families have been able to modify their loans, progress is very slow and more foreclosures are expected, according to the Treasury Department.
Rick Sharga, senior vice president at the Irvine, California-based company, stated that RealtyTrac is revising its estimate for foreclosures this year.
Approximately 3.4 million households will get a default notice this year, up from the prior estimate of 3 million to 3.2 million, and higher than 2.3 million foreclosures last year.
Rick further added that the numbers are high due to two concurrent problems of high loan defaults, which resulted from laxity in banking regulations, and highest U.S. unemployment rate in 26 years.