The foreclosure rate in the US is not getting any worse, but unfortunately, it is not getting any better.
According to RealtyTrac, May foreclosures were 322,920. That number was a 3% drop from April and a 1% drop from May 2009. Lenders are increasing the rate of “forestalled foreclosures” but the amount of delinquencies that end up as foreclosures has slowed. Banks, in other words are giving up on homeowners who are behind in payments.
“The numbers in May continued and confirmed the trends we noticed in April: overall foreclosure activity leveling off while lenders work through the backlog of distressed properties that have built up over the past 20 months,” said James J. Saccacio, chief executive officer of RealtyTrac. One in every 400 U.S. housing units received a foreclosure filing during the month.
The problem states remain Nevada, Arizona, and Florida. Ten states account for 70% of all foreclosures. Those include Michigan, Illinois, California, Texas, Ohio, Georgia, and New Jersey.
The news is another sign that the federal government’s $75 billion homeowner aid act has done little to stop the increase of people who cannot stay in their homes. Those homeowners who do get aid often default a second time. This is probably due to high unemployment rate and an ongoing dearth of credit for those without near-perfect credit ratings.
The housing market will find it increasingly difficult to absorb foreclosed inventory is also likely to get worse. Federal tax credits for home buyers expired at the end of April. The Mortgage Bankers Association said that home loan applications have fallen for five weeks in a row. It has occurred to potential buyers that home prices have not stopped falling. Someone could buy a house today and find that it loses value by the end of the year.
It is depressing that foreclosures remain at a level which could total over 3 million in 2010. That would top last year’s numbers. Despite small indications which occasionally show an improvement in the market, it is still dropping like a rock.
Douglas A. McIntyre
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