FORECLOSURE filings in the United States jumped 57 percent and bank repossessions more than doubled in March from a year earlier as adjustable mortgages increased and more owners gave up their homes.
More than 234,000 properties were in some stage of foreclosure, or one in every 538 US households, Irvine, California-based RealtyTrac Inc, a seller of default data, said yesterday. Nevada, California and Florida had the highest rates. Filings rose 5 percent from February, Bloomberg News said.
About US$460 billion of adjustable-rate loans are scheduled to reset this year, according to New York-based analysts at Citigroup Inc. Auction notices rose 32 percent from a year ago, a sign that more defaulting homeowners are "simply walking away" and giving their properties back to the lender," RealtyTrac Chief Executive Officer James Saccacio said.
"We're not near the bottom of this at all," said Kenneth Rosen, chairman of hedge fund Rosen Real Estate Securities and chairman of the Fisher Center for Real Estate at the University of California at Berkeley. "The foreclosure process will accelerate throughout the year."
Rising foreclosures will add more inventory to an already glutted market, keep home prices down throughout at least next year and thwart efforts by Congress and President George W. Bush to help homeowners avoid default, Rosen said.
On the market
About 2.5 million foreclosed properties will be on the market this year and in 2009, Lehman Brothers Holdings analysts said in an April 10 report. US home price declines will probably double to a national average of 20 percent by next year, with lower values most likely in metropolitan areas in California, Florida, Arizona and Nevada, mortgage insurer PMI Group said last week.
Borrowers who owe more on their mortgages than their homes are worth may be buffeted by increasing job losses in a "very substantial recession," Rosen said. About 8.8 million borrowers had home mortgages that exceeded the value of their property, Moody's Economy.com said last week.
"At least 2 million jobs will be lost because of this recession, so we'll get a cumulative negative spiral," Rosen said. "A normal recession is 10 months. We think this one may be twice as long."
Bank seizures climbed 129 percent from a year earlier, according to RealtyTrac, which monitors foreclosure filings including defaults notices, auction sale notices and bank repossessions.
March was the 27th consecutive month of year-on-year monthly foreclosure increases. In February, foreclosure filings rose 60 percent.
A surge in defaults among subprime borrowers spurred the collapse of the US home loan market and has led more than 100 mortgage companies to stop lending.