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Lists of Foreclosures to Grow as Defaults Hit Record Levels

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By : John Cutts    99 or more times read
Lists of foreclosures are expected to grow as mortgage defaults hit record levels again in the July-September quarter, based on a report from the financial services division of credit reporting firm TransUnion.

During the quarter, 6.25 percent of all residential mortgages in the country became delinquent by two months or more, an overwhelming 58-percent increase from nearly 4 percent during the same quarter in 2008 and an increase of almost 8 percent from the previous quarter.

Despite the huge year-over-year increase rate, the quarterly increase rate slowed. The 7.6-percent increase from the previous quarter was lower than the 11-percent jump in the April-June quarter and from the 14 percent jump in the January-March quarter.

According to F.J. Guarrera, a top executive at TransUnion, despite the lower increase rate in defaults, the growth showed the still high number of troubled mortgages. His team expects the pace of mortgage defaults to start declining only in the middle months of next year.

Guarrera contended that mortgage defaults will only reverse their upward direction if unemployment and home values improved significantly.

According to the TransUnion analysis, which is based on the company's 27-million-account database, the highest rates of mortgage defaults are in states with a glut of lists of foreclosures.

In Nevada, the default rate soared to 14.5 percent from 7.7 percent in the July-September quarter last year. Florida increased its default rate to 13.3 percent from 7.8 percent in 2008.

In Arizona, the delinquency rate also soared to 10.4 percent, an overwhelming increase from 5.5 percent last year. In California, the default rate hit 10.2 percent, another big increase from 5.8 percent in 2008.

These four states occupied the 4 top spots of foreclosure charts in the July-September quarter and in October, with Nevada topping both charts based on pace of foreclosures. Based on number of overall foreclosure filings, California topped both charts, with more than 85,000 of its residential properties getting foreclosure actions in October and more than 250,000 units notified of foreclosure in the July-September quarter.

TransUnion also reported that the average home loan increased in the July-September quarter to $193,121, an increase from $192,287 during the same quarter last year.

The report also showed that the default rate may remain lower than 7 percent in the last quarter of 2009, but still higher than the 4.6-percent rate a year ago. It added that Nevada may hit a default rate of 16 percent, putting the state again on top of charts based on lists of foreclosures.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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