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Foreclosures Rise

ForeclosureS.com, RealtyTrac issue data

November 14, 2006


photo of Coco Salazar

Monthly foreclosures rose, according to a tracking service that paints a dire outlook for the Midwest during the fourth quarter.

Nationally, the number of homes in some stage of foreclosure jumped to approximately 97,000 in October from the previous month's level of about 82,100, according to ForeclosureS.com. In October 2005, the total was over 60,700.

Through Oct. 31, 766,058 foreclosures were filed -- up 20 percent over all of 2005, the real estate investment advisory firm and publisher of foreclosure property information said in an announcement.

"That subprime ARM or interest-only home loan may have been the perfect solution several years ago, but now that mortgage payment has adjusted upward. A 2 percent rate increase can double a monthly payment overnight," said Alexis McGee, ForeclosureS.com president, in the written statement. "Combine that rate shock with soaring costs of living, and the slowdown in home appreciation rates and sales, and many homeowners can't pay up and don't have enough equity to refinance or sell. Foreclosure is their only option."

California was the state with the highest number of foreclosure filings, with 17,167 in October, followed by Florida's 13,281 and Texas' 11,606, according to ForeclosureS.com.

In the Northeast, New Jersey, New York and Massachusetts led in foreclosures last month, respectively with 3,301, 2782 and 1826, the firm said.

While New Hampshire's year-to-date foreclosures are a low 753, the amount is 181 percent above the total in all of 2005, according to the announcement.

Far behind Florida, the state with the second-highest number of foreclosure filings in the Southeast was Tennessee, with 2,641, Foreclosures.com said.

"The foreclosure epidemic stretches throughout the Southeast and beyond, fueled by soaring living costs, consumer credit woes, the aftermath of creative mortgages, and high energy costs," McGee added.

In the Midwest, Illinois had the highest number for the month, with 8006 filings, and also had the highest year-to-date total, ForeclosureS.com reported.

"Final fourth quarter numbers aren't in yet, but brace for yourself," said McGee. "The region will be hit hard as more auto industry cuts take affect and speculative home purchases are derailed by slow sales and depressed prices."

RealtyTrac, which says it publishes the largest and most comprehensive national database of pre-foreclosure and foreclosure properties, released third quarter figures for metropolitan areas.

Detroit, Ft. Lauderdale, Fla., and Denver were the three cities with the highest foreclosure rates, knocking out Indianapolis, Atlanta and Dallas, which had held the top spots in the first and second quarters, according to RealtyTrac's announcement.

The rest of the top 10 consisted of Miami, Dallas, Indianapolis, Ft. Worth, Texas, Atlanta, Las Vegas and Memphis, RealtyTrac said.

Detroit reported 42 percent growth from the second quarter in foreclosure activity and had a rate of one new foreclosure filing for every 80 households -- 4.5 times the national average, RealtyTrac said. The foreclosure rates of Ft. Lauderdale and Denver were more than four times the national average, with Miami just short of that. The remaining top 10 exceeded three times the average except for Memphis, which had a rate 2.5 times the national average, while Indianapolis was the only one that reported lower foreclosure rates, with 2 percent fewer foreclosures than reported for the second quarter.

"It appears that a combination of factors, including a slowdown in home sales and lower home appreciation rates are contributing to higher numbers of delinquencies," said James J. Saccacio, RealtyTrac chief executive, in the announcement. "It's also likely that part of the reason for the increased foreclosure rates is the long-anticipated effect of the first wave of adjustable rate mortgages resetting at higher monthly payments, putting homeowners into financial distress."

Chicago, while placing 19th amongst foreclosure rates, had the most new foreclosure filings for the third quarter, reporting 16,155 properties entering some stage of the foreclosure process. The second highest total was in Atlanta, with 13,562 properties, followed closely by Dallas' 13,422, RealtyTrac said.

While the majority of the nation's 100 largest metros reported increased foreclosure activity during the third quarter, a handful did report declines, including Houston, with a 15 percent downturn, and New York, with a 13 percent decrease, RealtyTrac noted.

Coco Salazar is an assistant editor and staff writer for MortgageDaily.com.

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