This is a good reminder we need to look at more 'indicators' than just the dow when assessing the health of the economy.

@takes_so_little: The Dow is outdated, join the revolution, watch the S&P.

@HIV 2 Elway: Or, watch other things, like unemployment, real wages, underemployment, housing starts, forclosure rates... etc.

That was kinda what I was saying. I don't really care who wins the dow v. s&p smackdown.

Once home prices across the country continue dropping and finally level off to "realistic" from "absolutely batshit insane", we'll see this issue right itself.

A family of four should not have to be comprised of a doctor, a lawyer, and two kids with part-time jobs just to get by.

Until home prices fall in align with the rule of thumb that your mortgage should be no more than 3-3 1/2 times your yearly salary there will be more foreclosures .

I think what happend as well I think many people are looking or have been forced to look at their finances alot harder . And many are simplying following the crowd . They figure if their house is underwater and they see people walking away they figure why not them .

I hate to say it but right now it's not politically incorrect to go through a foreclosure or bankruptcy so again many are just riding the wave that want a fresh start .

"...an increase of less than 1 percent from the previous month"

month over month, the # was less than one percent higher, so I don't see how this can be framed as some big jump.

@takes_so_little:
Bravo! I keep saying, the stock market is NOT the economy.

I just wish more people would realize this.

Many, many more foreclosures to come in the next 3 years. Having worked in the mortgage business with a major company, I can tell you I saw thousands of mortgages notes during my employment. The vast majority of those notes were adjustable rate, pay option loans that are scheduled to adjust in 2010 to 2013. You haven't seen anything, yet.

Illinois foreclosure activity decreased 11 percent from the previous month but was still up 54 percent from April 2008

I would interpret the 11 percent decrease as a good thing and the reference to the 54 percent as an arbitrary statistic.

There are many reasons why people end up in foreclosure. All of these stats are meaningless to me without knowing the details to back it.

@Brett Widness:

1) It wasn't framed as a big jump month over month. It was framed as a big jump year over year.

2) Here's a quote from the article: "Total foreclosure activity in April ended up slightly above the previous month, once again hitting a record-high level," said James J. Saccacio, chief executive officer of RealtyTrac.

The emphasis there is where it belongs.

How are property sales doing? I know that here locally to me, foreclosure inventory is tightening up as more people are taking advantage of the amazing market to buy.

Some Foreclosures could be avoided if the Banks would let actually apply payments even if it isn't the balance in full. My Sister in-law was layed off for a month and missed a month on her mortgage. She made a payment arrangement but missed a payment by one day... so she kept paying not knowing that they had voided her payment arrangement. Long Story short they refunded back her money and told her she was going into pre-forclosure. i imagine it'll make sense to someone, but if a person is making payments... why refund it and let them be a month behind until they catch up... it's almost like they want you to fail.

@ClintonOddfellow: Not sure, but I've been hearing a lot from my friends about how it's extremely competitive now that a lot of them are trying to buy a home. Some have even said that they would find a nice place they liked, but would never even go past the door once they found out there were already 10 people who had put in offers.

As kwsventures said, this is just the beginning.There has to be more homes that wont reset for another year or more, and when they due the foreclosure wave will likely start anew.

IMO, we will not see a 'bottom' until small home prices fall below Bentley-level prices.

@Sean Masters: Well, one more thing needs to happen for this issue to "right itself" which would be for banks and homeowners to work together to right-size the amount of debt recognized on houses that adjusted in real value by 50%. That 2-1 bungalow in LA that appraised for $650k 2 years ago was never really worth $250k, but someone who has a $500k+ note on it will be in deep trouble when the appraisal becomes more realistic.

@pecan 3.14159265: I'm about to close on a house is South Florida and have had that exact experience that you are referring to. I looked for 2 months and any house that was worth buying was either under contract after 3 days on the market or was a short sale with multiple offers at or over list price.

I ended up going to see a bank owned house the day it was listed, on my lunch hour, and making a full price offer on the spot. The bank accepted within 2 hours.

Crazy.

@ClintonOddfellow:

But is it really an "amazing market to buy"?

Where is the firm data showing that house prices have leveled? Or that the job market has improved suggesting improvement in the ability for people to pay and afford more.

And, I think anyone "stretching" to buy a home these days is taking a real gamble because unless you've got a guaranteed job at a guaranteed business (does that exist?), or are a doctor or something, you don't really have a solid job market to work with yet.

Lawyers, engineers, executives, etc... everywhere you look there is downsizing... even if you haven't been downsized, you run the risk of it happening and then not being able to find something comparable quickly (or at all).

Take a reasonable asking price today... drop it by 15%... that's about what I think I'd need to see for it to be worth taking the risks.

Otherwise you're setting yourself up to become a mini-version of what has just happened--buying in at a certain point because you feel it will only be harder or more expensive to buy later, only to find out that in 3,4,5,whatever years it actually hasn't gotten that much better.

Of course, this is not taking into account life-situations... if I had kids I'd want to own in a good community for stability, etc... or if I knew I was going to live in this certain home for 10-15 years or more that's another good reason to buy...

@u1itn0w2day: I had never heard that rule of thumb, but it sounds great, and even maybe on the high side.

If I bought into all of this gloom and doom, I wouldn't have made the move recently to buy my first home. Here in the triangle area of NC, it isn't so gloomy, yes there are foreclosures but home prices are holding steady.

We are not really buying my home as an investment opportunity, but a place to live for quite a while. We also bought well below what what we qualified for. This is a great time to buy a home that you are going to live in for a while and can easily afford. Between the crazy low interest rates, and the first time home buyer tax credit, there hasn't been a better time for me to buy. Add to that a credit union still doing 100% financing, no PMI, and no mortgage points, this is a win win situation.

It would be interesting to look at the root cause of these foreclosures. I notice that most of the top states also probably have the highest density of retired people. Perhaps their income from now non-existent/valueless investments (including Bernie) has been responsible. The next category to look at is if the lack of medical coverage caused it.

A lot are probably from all the early jobless people starting to run out of cash. This will continue, and probably have a sharp increase when unemployment starts to run out for the bulk of the jobless.

It would be an interesting analysis.

@emis:

No guts, no glory. My sister and her husband just closed on a place for around a mil. They're sitting pretty at the moment and it would take a hell of a new downturn to disturb that.

@Dethzilla: Probably because they realized your sister in law had no realistic chance of ever catching up. She was so far in the weeds they probably wanted to send her a banjo.

It's been said many times (and it's true) that banks don't want your damn home in the vast majority of cases. They'll never be able to sell it for more than a fraction of what they've lost on it. The only reason for them to foreclose in this environemtn is they figure you have no chance in hell of catching up and they might as well cut their loses.

@baquwards:

It's a pretty sweet time for those that weren't impulsive or unlucky or stupid earlier on.

To my mind, that is somewhat illogical. She's TRYING to keep her house-why is putting her into foreclosure (and getting a house that, as you pointed out, the bank doesn't want) a better alternative than accepting some payment until she can get back to paying the full amount?

It makes no sense in this case or in cases of auto loans to take the property when someone is making at least some payment, then auction it for FAR less than it's worth.

I'm not saying that they legally don't have the right to do this, nor am I implying that it's OK to fall behind on bills. But who exactly does it benefit to take over property at a massive loss from someone who is paying? It (clearly) hasn't benefited the banks-people end up trying to pay, getting told "No-it's not the full amount, so we don't want it-GTFO", they get put in foreclosure/repossession, said property gets sold at bargain-basement prices, the bank attempts to recover the remainder of the loan balance, and fail when the person who couldn't afford their full payment files for bankruptcy. So how exactly did not allowing partial payments help ANYONE involved?

I would rather see someone who's struggling get a reduced payment then be foreclosed on/face repossession. It would be a little less "lose/lose" than the current system.

@Jennifer Duquette: Sorry-that replied to the wrong post-that was supposed to be for henwy's post to Dethzilla's topic

@SherlockJahoob: Actually most of them are places where people were buying retirement and second homes and the values were increasing at amazing rates earlier in the decade. The supply of new housing inventory far surpassed the demand of new entries into the market. (Florida, Nevada, Arizona)

@kwsventures: I hope those people are able to refinance before then...

@u1itn0w2day:

This is a really good point: just like everyone followed their neighbors in over spending and buying houses they couldn't afford now they're following their neighbors example by walking away from their house...

Sounds like a self-licking ice cream cone to me

@minsky: "I just wish more people would realize this."

Me to, BEGINNING with mass media.

@u1itn0w2day: Um, way to completely ignore the PEOPLE ARE LOSING THEIR JOBS AND HAVING THEIR INCOME CUT factor, douchebag.

Yes, all this is happening because everybody who's not as smart as you was irresponsible, so you can rest easy.

*facepalm*

@Dethzilla: Unfortunately, that's not even close to a rare story -- I hear it all the time (working a Foreclosure Prevention Counseling line).

Personally, I don't think it's that the banks *want* to let people go into foreclosure; it simply wouldn't make financial sense, as they typically lose tens of thousands more on a foreclosure than they would even if they just gave someone a free ride for, say, a whole year -- though as I've told people before, "If banks weren't shortsighted, we wouldn't be where we are now anyway".

Most of what I see has convinced me that banks are simply THAT disorganized, and that messed up from the hangover after the marathon Irresponsibility Party they threw this last few years -- they don't really seem to be *capable* of helping people. They're blisteringly understaffed; their reps have little access to up-to-date and correct information and even less power to do the things that might actually help someone; and the overall effect is that they mostly are just trying to "get rid of people" who call them for help.

I could write more about it, but crap, I discuss this stuff all day and I'm a little worn out already. ;)

@Mary Marsala with Fries: People loosing their job is PART of the problem but the whole house of cards started going before the collapse last fall. I lived in a couple of boom areas and all you had to do ask is where the heck is the money coming from and now we know .

I've also seen too many spend beyond their means and even have the ability to pay even though it be barely and they have essentially quit,given up or said screw their creditors . There was a day when bankruptcy and foreclosure was politically incorrect but now it's seems like no big deal to many . You mean nobody is following the leader here ???

Sorry if you lost your job but the 3 to 1 is a pretty accurate tool when determining a mortgage.