Mortgage Daily

Published On: July 12, 2007
Favorable Foreclosure Figures

RealtyTrac reports 164,644 June filings

July 12, 2007


photo of Coco Salazar
As monthly foreclosures fell, Nevada still had the worst foreclosure rate of any state while California still had the highest number of filings and six of the metropolitan areas with the highest rate. Individual states are still actively pursuing foreclosure prevention programs — with Massachusetts halting for three months all of one lender’s pending foreclosures.

Foreclosure filings amounted to 164,644 in June — falling 7 percent from May’s level, according to RealtyTrac’s latest U.S. Foreclosure Market Report. Nonetheless, the number, which accounts for default notices, auction sale notices and bank repossessions, is still 87 percent higher than in June 2006.

The national foreclosure rate for June was one foreclosure filing for every 704 households, according to the report.

“Foreclosure activity subsided somewhat in June after hitting a 30-month high in May,” RealtyTrac Chief Executive James J. Saccacio said in an announcement. “And the drop in activity was fairly broad, with 33 states reporting month-over-month decreases. Still, the foreclosure rates in most states remained substantially above last year’s levels.

For the sixth consecutive month, Nevada’s rate led the way, with one foreclosure filing for each 175 homes in June, RealtyTrac said. California’s rate of one foreclosure filing for every 315 households climbed to the second-highest in the nation and bumped Colorado’s rate to the third-highest at one filing for every 317 homes. Florida, Arizona, Ohio, Michigan, Georgia, Connecticut and Indiana had the fourth- to 10th-highest foreclosure rates, respectively.

Each of the top three states experienced a monthly decline in the number of foreclosure filings, but California still held the most — 38,801 — of any state for the sixth month in a row in June, according to RealtyTrac, which says it publishes the largest and most comprehensive national database of foreclosure and bank-owned properties. Florida and Ohio had the second- and third-highest amount of filings.

California also continued to hold six of the nation’s top 10 metropolitan foreclosure rates in June, including the top four spots held by Stockton, Merced, Modesto and Riverside-San Bernardino — all with rates more than five times the national average. The other two California top 10 cities were Vallejo-Fairfield at No. 7 and Sacramento at No. 8. Las Vegas had the fifth-highest rate, followed by Greeley, Colo., and the ninth and tenth spots were filled by Detroit and Miami, RealtyTrac said.

While monthly filings may be down, data compiled by Bargain Network states that the number of properties entering some stage of the foreclosure process edged up 2 percent from the first quarter to an estimated 422,300 in the second.

“Quarterly data suggests that the foreclosure filing rate is still rising, although at a significantly slower rate than noted in the first quarter of 2007 when foreclosure listing activity rose 20 percent,” Bargain reported. “The current data supports the premise put forth by some analysts and industry experts that the upward trend in foreclosure activity, which was attributed to several factors including the collapse of the subprime mortgage market and the resetting of billions in adjustable rate mortgages, may be leveling off.”

“A look at U.S. foreclosure activity for the last eight months suggests that this may be a possibility as foreclosure listings activity continues downward after hitting a high in the first quarter of 2007.”

Bargain said foreclosure listing activity in five states represented over 58 percent of the nation’s activity in the second quarter, with California continuing to hold the record high with over 83,210 homes entering some phase of the foreclosure process. Florida was second with 78,408 fillings, and with a much lower 31,898 Texas came in third, followed by Illinois’ 24,890 and Colorado’s 24,436.

In an effort to combat the high incidences of foreclosures in Denver, the city’s Foreclosure Task Force issued a recommendations report outlining strategies related to education, prevention, intervention, and enforcement as pro-active measures to combat foreclosure problems. Among the recommendations in the report, which follows a 400 percent increase in Denver’s number of foreclosures since 2002, was for the city to create an ombudsman position or program that troubleshoots and advocates for homeownership sustainability. Education and multilingual programs were critical components identified to help guard against risky mortgage products and to help consumers prepare for long-term homeownership.

Meanwhile, PMI Mortgage Insurance Co. has provided a $29,000 grant to the League of United Latin American Citizens to provide resources to borrowers delinquent on their loans, according to an announcement. The League is to use the funds for sponsorship of five foreclosure prevention clinics or seminars that offer services to borrowers facing immediate foreclosure problems, and educate them on the advantages of communicating with their lenders, the basics of foreclosures laws, and available options. The grant will fund ongoing seminars to educate housing professionals of the options available to prevent foreclosures.

Clinics held in Orlando and Miami, Fla., reportedly helped more than 100 families, while another 50 families are on a waiting list to receive counseling, and 120 real estate professionals attended the training sessions.

Certain Massachusetts borrowers who are delinquent on their subprime loans from Fremont Investment & Loan may get relief if the state’s attorney general determines the loan was unfair or deceptive.

As part of an agreement with the attorney general, Fremont will stop foreclosures on over 2,000 loans it originated in Massachusetts, provide documentation to the office for each delinquent loan and allow the office a 90-day period to review each loan, according to an announcement. The subprime lender must also provide files on the 290 Massachusetts loans it owns but has contracted to sell and give the office a 45-day period to review the files before they are transferred. Fremont will pay the costs of the loan review process.

The attorney general may object to a foreclosure or transfer of loans if it believes Fremont’s lending or foreclosure practices violated consumer protection laws, the announcement stated. If the attorney general objects, a potential payment plan or other relief will be requested on the loan.

“We appreciate Fremont’s cooperation at this stage as we work to address serious concerns about the company’s past subprime lending activities,” said Attorney General Martha Coakley in the announcement. “This agreement is an important step in providing immediate assistance to distressed borrowers and it will stop the foreclosure process until a determination has been made on whether the borrower may be entitled to financial relief.”

To help overall Massachusetts subprime borrowers facing foreclosure, Governor Deval Patrick unveiled a $250 million program described as “the most comprehensive, publicly assisted loan program in the nation to help address the ongoing home foreclosure crisis.” Quasi-public agency MassHousing will partner with Fannie Mae to provide $250 million for the program, which will also feature foreclosure prevention counseling.

Eligible borrowers may be able to refinance into a loan of up to 40-years fixed-interest on 105 percent loan-to-value. Interest rates are expected to be about 7.875 percent at the outset. The program is for borrowers with modest incomes who were put into unaffordable and unsustainable loans, and who may have been victims of abusive lending practices. Borrowers can be delinquent up to 60 days and still qualify under the condition that delinquency was caused by their interest rate resetting to a higher level. Credit scores as low as 560 will be eligible, although slightly higher for multifamily borrowers, according to the announcement.

“Too many of our residents were put into loans they couldn’t afford,” Patrick said in the announcement. “This innovative mortgage loan program will give some of our most vulnerable citizens a fighting chance to keep their homes.”

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