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Even MORE Foreclosures? August Sees Surge in Mortgage Default Warnings

Real estate news continues to be grim, as mortgage default warnings surged 33% in August over July. Read this story and more at Movoto.

Stephanie

Stephanie Huskey is the resident real estate blogger for Movoto.

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home for sale with foreclosure sign

Photo via http://www.foreclosurebusinessnews.com/2009/05/

Homeowners around the country really felt the heat in August, and it had nothing to do with the weather outside. Instead, the heat came in the form of mortgage default warnings.

Foreclosure listing firm RealtyTrac Inc. reported via Yahoo! Finance today that the number of U.S. homes who had an initial default notice given to them surged to 78,880 in August, which is a 33% jump over July’s number — the highest it’s been in 9 months and the single largest monthly gain in 4 years. For those who have (luckily) never received one, an initial default notice is step one of the foreclosure process, which means that a new wave of foreclosures may soon be on the horizon for more American families.

The top-10 hardest-hit states in the month of August include Nevada, California, Arizona, Georgia, Idaho, Michigan, Florida, Illinois, Colorado, and Utah.

Though a number of factors caused a slowdown in the amount of new foreclosures being processed — lenders robo-signing foreclosure paperwork, court delays in select states, government probes into mortgage-lending practices coming to a potential resolution, and general reluctance on the part of lenders to repossess their properties while home sales have stalled, just for starters — it appears that banks may be getting more aggressive towards homeowners who have substantially fallen behind on their mortgage payments.

Rick Sharga, a senior vice president at RealtyTrac, put it thusly:

“This is really the first time we’ve seen a significant increase in the number of new foreclosure actions. It’s still possible this is a blip, but I think it’s much more likely we’re seeing the beginning of a trend here.”

Is there any good news to be had while all this plays out? Actually, there is.

  • Even taking into account the 33% increase, the number of properties that received a default notice in August 2011 is still 18% lower than at the same time last year and is 44% lower than its peak back in April 2009.
  • Scheduled foreclosure auctions decreased by 1% from July’s numbers and decreased a substantial 43% when compared to the numbers from August 2010.
  • Repossessions dropped to 64,813 in August, which is 4% lower than in July and 32% lower than it was a year ago — and is substantially better than the peak of 102,134 it hit back in September 2010.
  • Overall, repossessions in 2011 are expected to hit 800,000, substantially less than the more than 1 million homes repossessed last year and the 1.2 million projected for this year.
  • In August, a total of 228,098 homes (or one in every 570 households) received a foreclosure-related notice. Though July’s number was 7% less than that, August 2011′s number was around 33% less than August 2010′s.

Most importantly, the faster the rate of foreclosures, the faster the housing market may start to turn around. So long as the number of possible foreclosures remain high, recovery will probably continue to elude the market. This knowledge won’t be any source of comfort for the Americans who lose their homes, but it may end up allowing things to get better quicker in the long run. And that’s something everyone wants.

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Stephanie Huskey is the resident real estate blogger for Movoto and is glad she neither owns a home at the moment, nor will in the foreseeable future. Interested in getting her advice on your blog? She’s currently seeking guest blogging opportunities so she can share her knowledge with new communities! You can find her over here at Elance.com.

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posted on: September 15, 2011
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2 Comments

  1. Real Estate News: The Home Prices Triple-Dip is Coming

    [...] The 14% uptick in new mortgage default warnings [...]

  2. How to Bring About a Housing Recovery

    [...] Lenders robo-signing foreclosure paperwork, court delays in select states, government probes into mo…, and other factors have caused foreclosures to slow down and backlog to increase. Until processes are made clear and lenders are completely sure about how foreclosures should be properly processed, a housing recovery will elude the country. [...]

 

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