FORECLOSURE filings in the United States more than doubled in the first quarter as payments rose for subprime adjustable mortgages and falling prices left property owners unable to sell or refinance without losing money.
Almost 650,000 properties were at some stage of foreclosure during the quarter, or one in every 194 US households, California-based RealtyTrac, a seller of foreclosure data, said yesterday. The number was 112 percent above a year ago. Nevada, California and Arizona had the highest rates, Bloomberg News said.
Congress, the Bush administration and regulators have urged lenders to renegotiate terms for borrowers so they can stay in their homes, easing the glut of empty houses. Such efforts may mask the slump's extent by delaying foreclosures, RealtyTrac said.
"This country needs a cleansing," billionaire real estate investor Sam Zell, chairman of Equity Group Investments, said yesterday at the Milken Institute Global Conference in Los Angeles. "We need to clean out all those people who never should have bought in the first place, and not give them sympathy."
About US$460 billion of adjustable-rate loans are scheduled to reset this year, according to New York-based analysts at Citigroup.
A surge in defaults among subprime borrowers spurred the collapse of the US home loan market last year.
Empty houses
More than 100 mortgage companies have stopped lending, closed, or sold themselves.
Home prices in 20 US metropolitan areas fell 10.7 percent in January from a year earlier, the most on record, declining for the 13th straight month, according to the S&P/Case-Shiller home-price index. A record 18.6 million homes stood empty in the first quarter, the US Census Bureau said yesterday.
Philadelphia issued a moratorium on seizures last month to give so-called workout plans a chance to succeed.
The subprime borrowing spree featured lax lending standards that allowed people to buy homes with little or no down payment, and many of those borrowers today have no incentive to pay off mortgages that are worth more than the homes they bought, Zell said.
"That whole process has to be liquidated," Zell said.
Nevada led the nation with the highest foreclosure rate in the first three months of the year. Filings rose 137 percent to 19,595 from the year-earlier period.
One in every 54 households there was in default or foreclosure, said RealtyTrac.
California had the most filings at 169,831, and the second-highest rate at one for every 78 households. Arizona had the third-highest rate, one in every 95 households. Florida was fourth at one in 97. The foreclosure rate was one in 110 in Colorado, one in 166 in Massachusetts.