Foreclosures “zoomed” in August, up 115% from last year and 36% from July according to the newest numbers from RealtyTrac. This is the beginning of one of three remaining waves that will hit the market in the next year. This wave is expected to peak in October as 2 million 2/28 ARMs reset to market rates and an estimated 600,000 homeowners can no longer afford their payments.
“The jump in foreclosure filings [in August] might be the beginning of the next wave of increased foreclosure activity, as a large number of subprime adjustable rate loans are beginning to reset now,” said RealtyTrac Chief Executive James J. Saccacio.
“Another significant factor in the increased level of foreclosure activity is that the number of REO filings (bank repossessions) is increasing dramatically, which means that a greater percentage of homes entering foreclosure are going back to the banks.”
With markets flooded with foreclosed properties and the pool of mortgage applicants shrinking rapidly, borrowers are finding it difficult or impossible to sell their properties on the market or at auction before the bank repossesses them. In the month of August there were 243,947 foreclosure filings, 1 for every 510 households in the U.S., the highest numbers since RealityTrac began publishing its report. 42,789 homes went unsold and were repossessed.
The states most affected in August were so-called “sun belt” states and Midwestern “rust belt” states that are reeling from the loss of manufacturing jobs. Nevada (one for every 165 households,) California (one in 224), Florida (one in 243), Georgia (one in 271), Ohio (one in 281), Michigan (one in 288),Arizona (one in 289), Colorado (one in 312), Texas (one in 532), and Indiana (one in 544).
When real estate markets were hot, borrowers in trouble were able to sell their homes for enough to pay off their loans. Now, with the markets flooded with foreclosures and prices dropping, borrowers in trouble may find out that they owe more than their house is worth.
August foreclosures zoom [CNNMoney]
Foreclosures more than double in past year [MarketWatch]
Foreclosures Surged 36% in August, Report Says [New York Times]
U.S. Foreclosures Continue to Surge [Wall Street Journal]