Home Foreclosures Up 121 Percent
The number of households facing the foreclosure process more than doubled in the second quarter compared to a year ago, according to data released Friday.
Nationwide, 739,714 homes received at least one foreclosure-related notice during the quarter, or one in every 171 U.S. households, Irvine, Calif.-based RealtyTrac Inc. said. That's up 121 percent from the second quarter of 2007.
Soft housing sales, declining home values, tighter lending standards and a sluggish U.S. economy have left strapped homeowners with few options to avoid foreclosure. Many can't find buyers or owe more than their home is worth and can't refinance into an affordable loan.
Foreclosure filings increased year-over-year in all but two states, North Dakota and Alaska.
Nevada, California, Arizona, and Florida continued to clock in the highest foreclosure rates. One in every 43 Nevada households received a filing during the quarter.
Cities in California and Florida accounted for 16 of the worst 20 metro foreclosure rates. Stockton, Calif., had the worst rate, with one in every 25 homes in the town receiving a foreclosure filing. That's nearly seven times the national average.
RealtyTrac monitors default notices, auction sale notices and bank repossessions. Banks took back more than 222,000 properties nationwide in the second quarter, the company said. Bank repossessions accounted for 30 percent of total foreclosure activity, up from 24 percent in the previous quarter.
Mark Zandi, chief economist at Moody's Economy.com, projects that by the end of next year, nearly 2.8 million U.S. households will either face foreclosure, turn over their homes to their lender or sell the properties for less than their mortgage's value.
The foreclosure report comes as the Senate is on track to pass a massive housing rescue bill by Saturday.
The bill is the most far-reaching rescue effort since the Great Depression - a $300 billion lifeline for homeowners facing foreclosure and their lenders, reports CBS News chief White House correspondent Jim Axelrod. The bill allows homeowners to get out of those killer adjustable rate mortgages and into new fixed-rate loans guaranteed by the government.
It's designed to keep an estimated 400,000 homeowners out of foreclosure and support troubled mortgage finance giants Fannie Mae and Freddie Mac.
The plan creates a new regulator and tighter controls on the government-sponsored mortgage firms and starts a permanent affordable housing program to be financed by their profits. That fund would be tapped to cover any government losses from the foreclosure rescue.
At a hearing Friday on Capitol Hill, Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, reiterated threats to more closely regulate loan servicing companies if they don't modify more home loans to prevent foreclosures. Loan servicing companies, which collect mortgage payments and distribute them to investors, have been criticized by lawmakers and consumer advocates for not doing more to help troubled borrowers.
CBS' Radio's Bob Fuss reports members of Congress say they're getting a lot of complaints from homeowners who say they're unable to get help from their lenders to avoid foreclosures. James Barber of the American Bankers Association insisted they try hard to avoid foreclosure - but one complication is that banks often re-sell mortgage loans to others.
An executive at Bank of America testified some homeowners calling for help reach a call center in India. Rep. Frank said he believes banks want to help homeowners avoid foreclosure but need to make sure all their employees know that is the case, Fuss reports.
Shares of Fannie and Freddie tumbled Friday. Investors remain jittery about the two government-sponsored mortgage companies' ability to raise cash to protect against losses. Fannie's stock fell 74 cents, or 6.2 percent, to $11.28. Freddie shares fell 62 cents, or 7 percent, to $8.19.