To no one’s great surprise, foreclosures exploded over the past year, increasing 25% over October 2007. The number is still lower than the peak hit in August when over 300,000 homes went into foreclosure, but the 279,000 in October represents a 5% increase from September:
The number of homeowners caught in the wave of foreclosures in October grew 25 percent nationally over the same month in 2007, data released Thursday showed.
More than 279,500 U.S. homes received at least one foreclosure-related notice in October, an increase of 5 percent over September, according to RealtyTrac Inc. One in every 452 housing units received a foreclosure filing, such as a default notice, auction sale notice or bank repossession.
More than 84,000 properties were repossessed in October, RealtyTrac said.
Nevada, Florida, and Arizona topped the list of states hit by the foreclosures, and Las Vegas won the dubious honor of the city most affected by it. The rate in Sin City hit an astronomical 1 in 62 homes as the housing bubble continues to deflate. Florida has four of its cities in the top 10, and California isn’t far out of the race for the bronze medal among states.
As the discussion in the video clip notes, the problem facing both lenders and borrowers is a lack of agency to renegotiate the loans. Normally, lenders would attempt to salvage the mortgage and keep the homeowner in the house if possible by renegotiating, but who can change terms on loans that have been securitized into MBSs? That Congressional mandate has made it all but impossible to conduct lending business on normal terms without an outside entity buying back the MBSs as a group. That’s what the federal rescue plan should have done, rather than buy equity in banks and provide blank checks to any company (or state) with incompetent management.
Fortunately, the foreclosure rate appears to have leveled off a bit. If we can keep it plateaued, housing values will eventually rebound to the point where fewer homeowners are under water and have more flexibility in their economic choices.