The Foreclosure Report

In May, foreclosure filings totaled 176,137, rising 19 percent from April and 90 percent from a year earlier, according to the latest U.S. Foreclosure Market Report by RealtyTrac, which includes default notices, auction sale notices and bank repossessions as filings. The national foreclosure rate was one foreclosure filing for every 656 U.S. homes.

RealtyTrac Chief Executive James J. Saccacio noted in a written statement the number of foreclosed properties are not increasing in every community, but are becoming more commonplace and adding to downward pressure on home prices in many areas.

For the fifth consecutive month, Nevada’s foreclosure rate — of one fling for every 166 households — led the nation, as its number of filings jumped 40 percent from April’s level, according to the Irvine, Calif.-based online foreclosure property marketplace. Colorado reportedly posted the second highest rate — with one foreclosure filing for each 290 properties — and California came in third through a rate of a filing for every 308 homes.

But the total number of foreclosure filings was highest in California — 21,704 — for the fifth month in a row, followed by Florida and Ohio, RealtyTrac said.

And California also held six of 10 metropolitan areas with the highest foreclosure rates in the nation. A 49 percent increase in foreclosure activity secured for Stockton to continue holding the top spot, with one filing for every 88 households, followed by Merced and Modesto in third, RealtyTrac added.

The numbers from RealtyTrac, which says it publishes the largest and most comprehensive national database of pre-foreclosure and foreclosure properties, differed from those of Bargain Network but still showed an increase in May.

Bargain reported that the number of properties entering some stage of the foreclosure process climbed 6 percent from April to 149,000 in May. However, the national rate of foreclosure listing activity rate dropped slightly from the previous month’s high of 87.5 percent to 85.9 percent in May.

Colorado posted the highest foreclosure saturation rate, with an estimated one filing for every 211 households, in Bargain’s data, and was closely followed by Florida, with one for every 245 homes.

Bargain reported the number of foreclosures was highest in Florida — with a 22 percent increase in the month to 29,820. California, which led the way last month, had the second-highest number and third place went to Texas. Illinois and Colorado rounded off the top five states, which altogether accounted for 59 percent of the nation’s total number of filings.

The total number of homes entering a foreclosure phase decreased in 35 of 50 states over the month. South Dakota reduced its number of filings by approximately 40 percent from April and other states showing a significant reduction included Wyoming and Tennessee, Bargain said.

Lloyd Segal, a 25-year mortgage veteran, who says foreclosures are at the highest level in a decade, has authored a book to help borrowers avoid the process, according to an announcement by his publisher AuthorHouse. The book provides step-by-step instructions, including deciding whether the property is worth saving, negotiating with lenders, and using the courts and other options to stop foreclosures.

“This is the only book that helps homeowners understand the foreclosure process in their state and explains the strategies they can utilize to stop the foreclosure and save their homes,” Segal reportedly said.

Certain nonprime borrowers of loans originated by Wilmington Finance Inc. in the name of AIG Federal Savings Bank between July 2003 and May 2006 may be eligible for a financial remediation program that will be implemented as part of an agreement with the Office of Thrift Supervision. The agreement calls for the two companies and American General Financial Inc. to provide affordable loans to borrowers facing a high risk of foreclosure, with certain borrowers eligible for a refund of part of their fees rather than for a new loan, according to an announcement by parent American International Group.

AIG said it will separately donate $15 million, over a three-year period, to certain nonprofit organizations to support their efforts to promote financial literacy and credit counseling. The donation will be part of a $50 million reserve that is in addition to a $128 million pre-tax reserve previously established to provide for management’s best estimate of the expected cost of implementing the program.

Loan modifications have recently been in the spotlight.

The American Securitization Forum developed guidelines for loan modifications in subprime mortgages that promote “more flexible use of modifications in appropriate circumstances to address the difficulties presented by the current market environment,” Wells Fargo, one of the players involved in developing the guidelines, said in an announcement. “We believe they will lead to reduced foreclosures, helping homeowners and communities, while continuing to balance the interests of all involved, including investors.”

Global investment banker Lehman Brothers will contribute $1.25 million over three years to support the National Community Reinvestment Coalition’s direct service initiatives, including a fair lending best practice campaign and a rescue fund, according to a press release.

“NCRC will use this support to ensure a robust financial service market that is free of discrimination, training and to provide a fresh start through our nationally celebrated Consumer Rescue Fund to homeowners who are at risk of default or foreclosure due to a change in circumstances or a problematic loan,” stated John Taylor, NCRC president and CEO, in the announcement.