The 6-percent increase in foreclosure filings nationwide in February from the previous month is so unexpected that Rick Sharga, vice-president for marketing at RealtyTrac, has called the increase shocking. Sharga and other analysts expected that foreclosure figures would decrease because of the foreclosure moratoriums given by mortgage banks and government lenders.
More than 290,000 housing units had a foreclosure notice in February, an increase of nearly 30 percent from total filings in February 2008. Included in the data are more than 74,000 mortgage bank repossessions, an increase of more than 10 percent from the 67,000 total in January. If data on tax foreclosure properties are included in RealtyTrac’s report, they surely also reflect increases, since the high jobless rate has affected everyone, including former owners of tax foreclosure properties.
Sharga is concerned about the February increase since foreclosure moratoriums from major mortgage lenders Freddie Mac and Fannie Mae should have covered thousands of troubled mortgages. Anyone analyzing the data would be bothered about how high the increase would be if the mortgage loans are finally uncovered when the foreclosure moratoriums are lifted.
RealtyTrac’s report also highlighted the difficulty of homeowners in default to get out of their distressed situation, which is similar to the situations of people troubled by tax foreclosure properties. Most borrowers in default have gone on into foreclosure even with the moratoriums given. In February, bank repossessions increased by 11 percent, almost twice the 6 percent increase in foreclosure filings.
Housing analysts said many defaulting loan accounts moved on into foreclosure partially because of their underwater conditions. In many areas where there are lots of lender and tax foreclosure properties, home prices have fallen so low that troubled borrowers no longer have the incentive to continue with the payments.
As the foreclosure crisis spreads its claws, many states that previously had very low foreclosure numbers are now feeling the effects of lender and tax foreclosure properties.
In South Carolina, where the unemployment rate hit the second highest level nationwide in January, foreclosure filings increased by 254 percent from February 2008 total filings. It had one foreclosure notice for every 818 houses, putting South Carolina 20th in RealtyTrac’s foreclosure chart for February.
Bruce Marks of the Neighborhood Assistance Corp. of America insisted however that faulty mortgage underwriting is the main cause of foreclosures in South Carolina. The loans were not affordable from the start. Unemployment worsened the situation, causing the rise in lender and tax foreclosure properties.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.
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