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Foreclosed Houses Pace Slow, Stress Index Improve

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By : John Cutts    99 or more times read
The pace of foreclosed houses slowed in some areas battered by foreclosures because of some improvements in the auto industry, according to the economic stress analysis report released by Associated Press for over 3,100 counties across the U.S. for the month of July.

According to Associated Press researchers, unemployment rates dropped slightly in July in counties where previously closed auto plants were reopened and resumed production. It also added that foreclosure rates slowed in Sun Belt areas considered epicenters of the foreclosure crisis. Meanwhile, bankruptcy rates, which typically lag in their response to economic changes, had an uptick.

The average economic stress index nationwide in July was 10.54, a pleasant decrease from the June index of 10.6. In July last year, the stress index was only 6.94. The higher the number, the higher the stress level is.

AP calculates the stress index of a certain county by assigning a number from 1 to 100 depending on the county's unemployment situation, bankruptcy rates and number of foreclosed houses.

Using the AP factors, a county is usually considered stressed if its score surpasses 11. In June and July, 41 percent of over 3,000 counties reached the stress level of 11 or higher. In July last year, only 7.3 percent of U.S. counties reached 11 or higher.

Among counties with a population of 25,000 or higher, the 5 counties which showed the greatest improvement were all locations of auto-related plants: Tuscaloosa in Alabama, Miami and Howard in Indiana and Warren and Giles in Tennessee.

Auto companies General Motors Corporation and Chrysler LLC reopened their plants, restored some shifts and resumed production to replenish their inventories. These developments showed that they are starting to emerge from their bankruptcies.

The Cash for Clunkers program had a big and positive impact on the auto industry, rejuvenating consumer confidence and employment in the auto sector. The program presented rebates of up to $4,500 to consumers who exchanged gas-guzzling cars for more efficient car models. Car sales increased by 2.4 percent in July and 30 percent in August because of the program.

Because of the positive consumer response to the program, GM has been rehiring over 1,300 workers that it laid off in the past months while Ford Motor said it is increasing its production by 33 percent in the last quarter of this year.

For the second consecutive month, counties in Michigan, Nevada and California had the highest level of economic stress in July, with stress levels ranging from 16.3 to 20.86.

Meanwhile, the pace of foreclosed houses nationwide in July slowed down to 1.49 percent, a decrease from 1.51 percent in the previous month of June.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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