Horrifying Foreclosure Numbers In April

(MoneyWatch)  You know you're in uncharted foreclosure waters when Rick Sharga, vice president of marketing and spokesperson for foreclosure tracking company RealtyTrac says the month's foreclosure numbers are a "shocker."

RealtyTrac announced that 1 in 374 U.S. households received a foreclosure notice in April, the highest monthly rate ever recorded in the four years that RealtyTrac has been keeping track.

The foreclosure number is nothing short of horrifying.

The even money was on a reduction in foreclosures for April, as the foreclosure numbers for March were so high. Instead, the number of homes receiving foreclosure notices went up again. April saw:

• 63,900 bank repossesions (down 11 percent because of the foreclosure moratoriums, now lifted)
• Foreclosure filings rise 1 percent from March, 2009, and 32 percent from April, 2008
• The total number of homes lost to foreclosure pass 1.3 million
• 1 in 68 households in Nevada receive a foreclosure filing
• 1 in 56 households in Las Vegas receive a foreclosure filing

Ten states, including California, Nevada, Arizona, Florida, Illinois, Georgia, Ohio, Michigan, Texas and Virginia accounted for 75 percent of all foreclosures. They're bubble states or rust-belt states (and getting rustier by the day).

As a real estate writer and columnist, I've known Rick for a long time, and moderated panels that included him as a speaker at industry and journalism conferences over the past few years. He's what we journalists call a "straight shooter," so you can count on him to deliver a soundbite that's short and sweet, and isn't gunked up with a lot of blather obscuring the point.

Still, for Rick to say that the April 2009 foreclosure numbers are a "shocker," makes me sit up a little straighter. But what he said next is even more interesting.

Rick said RealtyTrac is going to have to rethink its prediction of 3.4 million foreclosure filings in 2009. He now says that the numbers the company is tracking will "blow those numbers out of the water."

In other words, you ain't seen nothing yet.

A lot of the foreclosures to come are wrapped up in yesterday's news from the National Association of Realtors that home prices dropped. The fact that home prices dropped again isn't surprising. The sheer number of foreclosures and short sales coming onto the market are pushing housing prices down in key markets.

But when home prices drop, millions more Americans go underwater with their loans: They owe more than the house is worth, and the temptation to walk away increases. Also, the Obama Making Home Affordable program caps refinancings out at 105 percent of the loan amount. If you can't refinance your home and the payments are unaffordable, why not just hand the keys back?

In fact, RealtyTrac says the number of deed-in-lieu of foreclosure transactions has been increasing each month. Whether you get a foreclosure notice or you simply hand the keys back to the lender means more foreclosed homes that will clog up the market and push prices down further in a downward cycle.

For my money, this all goes back to jobs. If you don't have a job, and aren't bringing in any income, you're not going to be making your mortgage payment. (You're also not going to be paying your credit card bills - but we'll save that for another post.)

And if you stop making your mortgage payment, it won't be long before one of those foreclosure filings finds its way to your door.