New data show that during Q1 2010, foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 932,234 properties in the first quarter, a 7% increase from the previous quarter and a 16% increase from the first quarter of 2009. The data was supplied by research firm RealtyTrac.
Foreclosure filings were reported on 367,056 properties in March, an increase of nearly 19″ from the previous month, an increase of nearly 8% from March 2009 and the highest monthly total since RealtyTrac began issuing its report in January 2005.
“Foreclosure activity in the first quarter of 2010 followed a very similar pattern to what we saw in the first quarter of 2009: a shallow trough in January and February followed by a substantial spike in March,” said James J. Saccacio, chief executive officer of RealtyTrac.
It is not surprising that the states with the highest foreclosure rates continue to be those which have been terribly troubled in the past–Nevada, Florida, and Arizona.
The news shows how intractable the American housing disaster is. The Congressional Oversight Committee that keeps track of TARP activity issued a report yesterday that described the Administration’s Home Affordable Modification Program, which has a budget of $75 billion, as being totally ineffective. The White House has tried to improve on the program with a proposed plan to get banks to lower principle values on homes that may go into foreclosure. Banks are objecting because of the losses that they will have to take and their belief that some homeowners will default to take advantage of the benefits of the program.
Foreclosures continue to rise for reasons that have already been well articulated. People with underwater mortgages have no financial incentive to stay in houses that they believe will never have any equity values. Eleven million mortgages are underwater now.
Unemployment clearly pays a role in high default levels.
As the Oversight Committee pointed out, federal aid is coming to the housing market too slowly. Efforts to modify mortgages have permanently helped a few hundred thousand people in a world in which nearly 4 million people could default on mortgages this year. Banks have been given little incentive to be helpful. Whatever payments the government makes to gain their cooperation in modify loans have clearly been unsuccessful.
RealtyTrac does not see much light at the end of the tunnel. and there is not reason it should. The rise in foreclosures will tend to push down home prices by adding cheap inventory to the market. That in turn will cause potential buyers to question whether now is the time to buy a home. And, underwater mortgages will become more underwater as each month passes.
Douglas A. McIntyre