The number of households in foreclosure increased 79 percent in 2007, with about one of every 100 U.S. households at some stage of the foreclosure process, according to the latest numbers from data aggregator RealtyTrac.
The numbers come on the heels of two reports — one by a consumer advocacy group, the other by an industry association — that suggest the Bush administration’s foreclosure prevention efforts will fall short of expectations.
Nationwide, RealtyTrac tallied 2.2 million foreclosure-related filings during the year on about 1.3 million homes, a 75 percent increase in filings from 2006.
Foreclosure-related filings include default notices, auction sales notices and bank repossessions. Because one home may be subject to several filings, the number of foreclosure-related filings is larger than the number of foreclosures.
Although not every foreclosure is captured by RealtyTrac, the numbers can serve as a benchmark for tracking foreclosure trends. The year-end statistics 2007 reveal state-by-state trends for the fourth quarter and December.
The foreclosure picture improved at the end of the year for some states in the Midwest and Northeast including Ohio, Indiana, New York and New Jersey. But foreclosure filings were up sharply in December in some of the states already hardest hit by foreclosure, such as California, Nevada and New Mexico.
According to RealtyTrac, foreclosure filings fell dramatically during December in Ohio (-26 percent), Indiana (-34 percent), New Jersey (-23 percent) and New York (-20 percent).
But the number of foreclosure filings during the final month of the year rose sharply in California (up 33 percent), Nevada (up 64 percent) and New Mexico (up 58 percent).
California and Florida, with foreclosure filings on 414,804 properties, accounted for about one in three of the 1.3 million homes RealtyTrac determined were at some state of the foreclosure process during 2007. Michigan, Ohio, Illinois and Indiana accounted for another 269,479 homes. All told, slightly more than half of all homes RealtyTrac said were hit by foreclosure filings last year were located in those six states.
The states with the highest household foreclosure rate were Nevada (3.38 percent), Florida (2 percent), Michigan (1.95 percent), California (1.92 percent), Colorado (1.92 percent), Ohio (1.8 percent), Georgia (1.57 percent), Arizona (1.52 percent) Illinois (1.25 percent) and Indiana (1.03 percent). The U.S. average was 1.03 percent.
The latest numbers show growth in foreclosure filings leveling out during December and the fourth quarter in crucial foreclosure states like Florida, Michigan and Colorado.
In Florida, foreclosure filings were up 6.8 percent in December compared to November, and grew 4.8 percent between the third and fourth quarters in 2007.
Growth in foreclosure filings in Michigan was essentially flat during December at 1.6 percent, and the number of filings decreased 16.6 percent in the fourth quarter.
Colorado showed a 2.5 percent decline in foreclosure filings during December, and a 3.9 percent fourth-quarter drop.
Some properties may have just entered the initial stage of foreclosure in 2007 and could be going through the rest of the foreclosure process in 2008, unless lender and government intervention efforts begin to gain more traction, said RealtyTrac Chief Executive Officer James Saccacio in a statement accompanying the release of the report.
The Center for Responsible Lending released a pessimistic report Monday that estimated the Treasury Department’s HOPE NOW initiative involving voluntary loan modifications by loan servicers will prevent only 118,200 foreclosures, or about 3 percent of outstanding subprime mortgages with adjustable interest rates. The report estimated that 3.5 million families with adjustable-rate mortgage (ARM) loans face interest-rate resets in the next two years.
Another study reportedly being circulated by members of the American Securitization forum estimated that the Bush administration’s new FHASecure program, aimed at helping ARM borrowers who have defaulted refinance into fixed-rate loans, will help only about 44,000 borrowers.
According to a Reuters report on the study, it recommends expanding the FHASecure program to include borrowers with fixed-rate loans and seriously delinquent borrowers who have demonstrated the ability to make steady payments.
The study did not analyze the impact of a proposal to increase the maximum-size mortgage eligible for FHA loan guarantee programs from $367,000 to nearly $730,000 (see Inman News story).
A spokeswoman American Securitization Forum, Katrina Cavalli, said in a statement that the group “supports responsible expansion of FHA and other sustainable refinancing opportunities. While we are discussing a number of ideas with our members, we have not endorsed any specific proposals as yet.”
Foreclosure trends in top 10 states