Record US Foreclosure Jump In Third Quarter

Record US Foreclosure Jump In Third Quarter

A California-based seller of default data, RealtyTrac Inc, which collects data from 90% of the US population, has revealed that property foreclosures in the US hit a record high in the third quarter of 2009 as more lenders took action against delinquent borrowers. 343,638 properties received foreclosure filings in September alone, the third-highest monthly total behind July and August of this year.

A staggering one out of every 136 American households was in receipt of a foreclosure filing. Amherst Securities Group LP in New York said that there are seven million properties currently in the foreclosure process, compared to a figure of 1.27 million for the same period in 2005. The inevitable impact on house prices is that they will continue their downward slide.

A Standard & Poor analyst has said that although subprime defaults – the initial cause of the problem – may be slowing, prime and “alt-A” loan defaults are on the increase. The prime loan default rate in the second quarter was 6.41%. A prime loan is given to a borrower who has a good credit history, whilst the “alt-A” loan is for borrowers who have self-certified their income without checks. S & P further announced that $400 billion in home mortgages outside of the government-supported Fannie Mae and Freddie Mac umbrella are now in default, and may be foreclosed.

JPMorgan Chase & Co.’s mortgage unit believes that things are only going to get worse, and Washington-based Mortgage Bankers Association thinks foreclosures are set to climb right through until late 2010, when unemployment may reach its peak at an estimated 10% of the US population. September’s foreclosure figures were up 29% from a year earlier.

RealtyTrac’s figures show that third-quarter bank repossessions have risen 21% on the second quarter of this year, and there have been increases in every state except two, plus the District of Columbia. Worst affected has been Nevada with a foreclosure rate of one in ever 23 homes, which is nearly six times higher than the national average. Arizona and California have seen one in every 53 homes hit by foreclosure filings. California, which is America’s most highly-populated state, had 250,054 filings, up 19% on the third quarter of 2008, and actual bank seizures were up 12%. California leads the top six states that account for 60% of the total filings made in the country. Florida is second worst, with 156,924 filings, up 23% on the previous year, with actual bank seizures up 16%.

Photo credits: Jeff Turner via Flickr