For 2nd Straight Month, More Homes Face Risk of Foreclosure

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By Alex Veiga

LOS ANGELES -- Banks are increasingly placing homes with unpaid mortgages on a countdown that could deliver a swell of new foreclosed properties onto the market by early next year, potentially weighing further on home values.

June provided the latest evidence of this trend, as the number of U.S. homes entering the foreclosure process for the first time increased on an annual basis for the second month in a row, foreclosure listing firm RealtyTrac said Thursday.

California in particular saw a big spike in foreclosure starts, or homes placed on the foreclosure path for the first time. They increased 18 percent versus June last year, the firm said.

The increase in foreclosure starts comes as banks make up for time lost last year as the mortgage-lending industry grappled with allegations that it had processed foreclosures without verifying documents.

The nation's biggest mortgage lenders reached a $25 billion settlement in February with state officials. And that's cleared the way for banks to address their backlog of unpaid mortgages.

11 PHOTOS
Best Beach Towns for Buying Foreclosures
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For 2nd Straight Month, More Homes Face Risk of Foreclosure

Average sale price: $355,604
Average foreclosure discount: 28.17%

The quintessential California beach town, Santa Cruz is located about 75 miles south of San Francisco. It is comfortably situated between thickly wooded mountains and clean sandy beaches. The Santa Cruz boardwalk entertains children and adults alike: It has an amusement park complete with roller coaster, arcades, mini-golf, bowling, shopping and outdoor concerts.

See foreclosures for sale near Santa Cruz, Calif.

Average sale price: $237,405
Average foreclosure discount: 30.34%

The Town of Barnstable is comprised of several famous Cape Cod villages, including Hyannis. It's also close to the islands of Martha's Vineyard and Nantucket. Hyannis has a large natural harbor and is the largest recreational boating port on Cape Cod. The Kennedy Compound is also located in Barnstable, in the village of Hyannis Port.

See foreclosures for sale in Barnstable, Mass.

Average sale price: $345,799
Average foreclosure discount: 30.56%

Honolulu, Hawaii's capital located on the island of Oahu, offers top quality surfing, famous Waikiki Beach and pristine hiking trails. It also has an exemplary public transportation system, which connects its world class shops and restaurants to its relaxing beaches.

See foreclosures for sale near Honolulu.

Average sale price: $161,819
Average foreclosure discount: 30.38%

Since Las Vegas isn't on the beach, your best bet for being able to gamble and ride waves is Atlantic City, N.J. Besides its familiar street names (see: Monopoly), the city has a world famous boardwalk lined with casinos, shops, restaurants and an amusement park.

See foreclosures for sale in Atlantic City, N.J.

Average sale price: $202,454
Average foreclosure discount: 31.14%

Hilton Head Island is home to three championship golf courses, including the site of the Verizon Heritage PGA Tour Golf Tournament. It also features award-winning restaurants and shopping, as well as an array of outdoor recreational activities. Here you can enjoy scuba diving, water skiing, fishing charters, cruises and dolphin-watching.

See foreclosures for sale in Hilton Head Island, S.C.

Average sale price: $159,065
Average foreclosure discount: 34.42%

Charleston prides itself on its beach-side golf courses, one of which was home to the 2012 PGA Championship. The city also comes with a rich history of plantations and historic homes and buildings.

See foreclosures for sale in Charleston, S.C.

Average sale price: $274,077
Average foreclosure discount: 38.80%

After a long day enjoying the sunny beaches or hiking in majestic mountains, spend the night tasting some of the finest California wines in Santa Barbara's wine country. The city also has a temperate climate year-round, so it is a great place to live if you want to avoid snowy winters and scorching summers.

See foreclosures for sale near Santa Barbara, Calif.

Average sale price: $156,148
Average foreclosure discount: 40.43%

Marco Island has miles of white-sand beaches and beautiful year-round weather. Naples, just north of Marco Island, also offers white sand beaches and has world class golf courses and exciting outdoor activities. Naples is also close to Everglades National Park.

See foreclosures for sale in Naples, Fla.
See foreclosures for sale in Marco Island, Fla.

Average sale price: $78,851
Average foreclosure discount: 44.38%

Texas has beaches, too! Miles of the Gulf of Mexico shoreline extend across Corpus Christi, where there are plenty of sites and attractions. Visit the U.S.S. Lexington Museum or the Texas State Aquarium. For more outdoor adventures, check out Mustang Island State Park, where you can enjoy fishing, bonfires, kayaking and camping.

See foreclosures for sale in Corpus Christi, Texas.

Average sale price: $93,188
Average foreclosure discount: 45.11%

Another outdoorsy paradise, Vero Beach offers -- not surprisingly -- miles of beaches and is home to the Pelican Island National Wildlife Reserve. Enjoy airboat tours, scuba diving, snorkeling and many other water and beach sports.

See foreclosures for sale in Sebastian-Vero Beach, Fla.

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Lenders initiated foreclosure on 12 percent of the loans behind in payment in June - the highest level since the first half of 2009, according to Fitch Ratings.

"These properties that are starting the foreclosure process are mostly homeowners who likely have been missing their payments for a year or more and just now are officially starting the foreclosure process," said Daren Blomquist, a vice president at RealtyTrac.

That means the latest crop of homes entering the foreclosure process does not signal that there is a fresh wave of homeowners in distress and missing payments.

Still, the increase in foreclosure starts sets the stage for a potential increase in homes sold at a discount via short sale, when the lender agrees to accept less than what is owed on the seller's mortgage. Others could end up taken back by banks and placed on the market also at a sharp discount.

Either way, short of homeowners obtaining loan modifications or otherwise arranging to exit the foreclosure process, many of these properties could end up adding to the inventory of foreclosed homes on the market, dragging down the values of nearby homes.

Those homes may not hit the market for many months, however.

In the second quarter, it took an average of 378 days for a U.S. home to complete the foreclosure process, or the point when a bank takes over the property, RealtyTrac said. That's up from an average of 370 days in the first three months of the year and a record going back to the first quarter of 2007, the firm said.

9 PHOTOS
Mortgage Assistance Programs
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For 2nd Straight Month, More Homes Face Risk of Foreclosure

Purpose: Lower your monthly mortgage payments.

General eligibility guidelines:
• You obtained your mortgage on or before January 1, 2009.
• You owe up to $729,750 on your primary residence or single unit rental property
• You owe up to $934,200 on a 2-unit rental property; $1,129,250 on a 3-unit rental property; or $1,403,400 on a 4-unit rental property
• The property has not been condemned
• You have a financial hardship and are either delinquent or in danger of falling behind on your mortgage payments (non-owner occupants must be delinquent in order to qualify).
• You have sufficient, documented income to support a modified payment.
• You must not have been convicted within the last 10 years of felony larceny, theft, fraud or forgery, money laundering or tax evasion, in connection with a mortgage or real estate transaction.

Next Steps: Contact your mortgage company to see if you are eligible. Also, fill out the following forms:

Request for Mortgage Assistance Form
IRS Form 4506T-EZ   or 4506-T
Verification of Income

See the Making Home Affordable website for more details.

Purpose: To allow homeowners with Fannie Mae or Freddie Mac-guaranteed mortgages to refinance into a lower rate. The program primarily targets "underwater" homeowners, borrowers who owe more on their mortgages than their homes are worth. The Obama administration recently lifted a cap that prevented homeowners whose mortgages were more than 125 percent the value of their homes from qualifying. That has extended the program to a much wider swath of homeowners.  

General eligibility guidelines:
• The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae.
• The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
• The mortgage cannot have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March-May, 2009.
• The current loan-to-value (LTV) ratio must be greater than 80%.
• The borrower must be current on the mortgage at the time of the refinance, with a good payment history in the past 12 months.

Next Steps: Determine if Fannie Mae or Freddie Mac owns your mortgage using their Loan Lookup Tools. You can also contact your current mortgage servicer or another that is approved by Fannie Mae or Freddie Mac to inquire about HARP. You can alsocompare rates and costs with additional mortgage companies to ensure best refinance terms.

See the Making Home Affordable website for more details.

Purpose: To allow homeowners with FHA-insured mortgages worth more than their homes to refinance into a  lower rate.

General eligibility guidelines:
• Your mortgage is not owned or guaranteed by Fannie Mae, Freddie Mac, FHA, VA or USDA.
• You owe more than your home is worth.
• You are current on your mortgage payments.
• You occupy the house as your primary residence.
• You are eligible for the new loan under standard FHA underwriting requirements.
• Your total debt does not exceed 55 percent of your monthly gross income.
• You must not have been convicted within the last 10 years of felony larceny, theft, fraud, forgery, money laundering or tax evasion in connection with a mortgage or real estate transaction.

Next steps: Talk to your mortgage owner to see if they want to participate in an FHA refinance. Or talk to an HUD-approved housing counselor for free.

See the Making Home Affordable website for more details.

Purpose: To help people who can no longer afford their mortgages to transition to more affordable housing. The program provides two options: a short sale or a Deed-in Lieu of foreclosure.

General eligibility requirements:
• You live in the home or have lived there within the last 12 months.
• You have a documented financial hardship.
• You have not purchased a new house within the last 12 months.
• Your first mortgage is less than $729,750.
• You obtained your mortgage on or before January 1, 2009.
• You must not have been convicted within the last 10 years of felony larceny, theft, fraud, forgery, money laundering or tax evasion in connection with a mortgage or real estate transaction.

Next steps: Contact one of the HUD-approved housing counselors for free to discuss your options. When it's time for HAFA, be prepared to provide the following:

Request for Mortgage Assistance (RMA)

For more information, see the Making Home Affordable website.

Purpose: Get free advice on buying a home, renting, defaults, foreclosures, and credit issues.

General eligibility guidelines: This service is open to everyone.

Next Steps: Search for a HUD approved housing counselor near you, or call 888-995-HOPE (4673) for free, comprehensive assistance around-the-clock.

Purpose: To help unemployed people manage mortgage payments. The program can either reduce payments or suspend them altogether for 12 months or more.

General eligibility guidelines:
• You are unemployed and eligible for unemployment benefits.
• You occupy the house as your primary residence.
• You have not previously received a HAMPSM modification.
• You obtained your mortgage on or before January 1, 2009.
• You owe up to $729,750 on your home.

Next steps: Contact a HUD-approved housing counselor at 888-995-HOPE (4673). They will help you understand your options, design a plan, and prepare your application. You can also contact your mortgage servicer to see if you are eligible.

See the Making Home Affordable website for more information.

Purpose: To recover damages if financially injured during a foreclosure from 2009 to 2010.

General eligibility guidelines:
• Your mortgage loan was active in the foreclosure process between January 1, 2009 and December 31, 2010.
• The property was your primary residence.
• You had one of the providers listed here.

Next Steps: Fill out the form for a free independent foreclosure review here. Make sure to send the form by September 30, 2012.

Click here for more info.

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In New York, it took an average of 1,001 days for the foreclosure process to run its course in the second quarter, down from 1,056 days in the first quarter.

Of the homes that entered the foreclosure process in June, those that end up as bank-owned properties would likely hit the market a year from now, Blomquist said.

"However, if they take the short sale route, it may be sooner," he said.

Short sales take, on average, 319 days to sell from the time they enter foreclosure.

A stronger housing market could mitigate the impact of future foreclosures on home prices, and home sales are expected to end up ahead of last year. But many economists still say the market is years away from a full recovery.

There are some 3 million U.S. homes behind on their mortgages, according to the Mortgage Bankers Association.

An additional 629,000 homes were on banks' books as of June, but not yet sold. That translates into a 15-month supply, at the current pace of sales, according to RealtyTrac.

And nearly 13 million home loans are underwater, or owing more than the house is worth. Those properties could be at higher risk for entering the foreclosure process.

Even so, the backlog in foreclosures that banks are still dealing with has slowed the pace of home repossessions.

RealtyTrac forecasts some 700,000 homes will be repossessed by lenders this year, down from about 1 million last year.

Copyright 2012 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. Active hyperlinks have been inserted by AOL.

13 PHOTOS
Cities With The Most Homes in Foreclosure
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For 2nd Straight Month, More Homes Face Risk of Foreclosure

Foreclosure rate: 1 in 347 homes
Number of homes: 942,312 (24th most)
Foreclosures (April 2012): 2,717 (16th most)
Homeprice decline from peak: -54.2% (sixth largest decline)


Median home prices in the Orlando area fell by 54.2 percent from their peak in the second quarter of 2006 through the end of 2011. Of the 50 most populous metro regions in the U.S., the Orlando-Kissimmee area has the tenth highest foreclosure rate in April, of one in every 347 homes. Orlando had 2,717 new homes in foreclosure this past April, up 12.9 percent from the 2,406 in April 2011. The forecast for the future is similarly bleak. Fiserv projects Orlando homes to continue to lose value between the fourth quarter of this year and the fourth quarter of 2013, predicting a 1 percent decline in prices over that time period.


See foreclosures for sale in Orlando and Kissimmee, Fla.


Source: 24/7 Wall St.


PHOTO: Jordi Gomara, Flickr.com

Foreclosure rate: 1 in 321 homes
Number of homes: 3,797,247 (third most)
Foreclosures: (April 2012): 11,840 (The most)
Home price decline from peak: -36.8% (twelfth largest decline)


From their peak in early 2007, home prices in Chicago fell 36.8 percent through the end of 2011. In April, the Chicago-Naperville-Joliet metro area had the largest number of new homes in foreclosure among the 50 largest MSAs, at 11,840. This represented an increase of 25.5 percent from April 2011 when 9,433 homes entered foreclosure. However, the number of foreclosures represents a 7.63 percent decline from March, when the Chicago area also led all metropolitan areas with 12,818 foreclosures. Another positive sign for Chicagoans: Home prices are projected to rise 6.3 percent annually through 2016, according to Fiserv.


See foreclosures for sale in Chicago, Naperville and Joliet, Ill.

Foreclosure rate: 1 in 315 homes
Number of homes: 1,353,158 (17th most)
Foreclosures: (April 2012): 4,295 (eighth most)
Home price decline from peak: -48% (eighth largest decline)


Residents of the Tampa, Fla., metro area watched the median home price in the region fall to $137,000 in the fourth quarter of 2011 -- a 48 percent drop from its peak. The region recorded 4,295 foreclosures in April 2012. To make matters worse, that number is up from the April 2011 figure. Then, only 2,701 homes in the area were new to foreclosure, meaning that foreclosures increased by 59 percent in the past year. One in every 315 homes in this MSA had a foreclosure start this past April.


See foreclosures for sale in Tampa, St. Petersburg and Clearwater, Fla.

Foreclosure rate: 1 in 313 homes
Number of homes: 1,798,501 (12th most)
Foreclosures: (April 2012): 5,755 (sixth most)
Home price decline from peak: -56% (third largest decline)


Home prices in the Phoenix region -- the country's twelfth-largest metropolitan area by housing units -- declined by 56 percent from their 2006 peaks through the end of 2011. Although this accounted for the third-largest decline in home prices among all metropolitan areas, the Phoenix region posted a 22.64 percent decline in foreclosures from March, as the number of new foreclosed homes fell from 7,439 to 5,755. Likewise, in the last year, the number of foreclosure starts in the area fell by 44.44 percent, from 10,358 in April 2011 to 5,755 this past April.


See foreclosures for sale in Phoenix, Mesa and Scottsdale, Ariz.

Foreclosure rate: 1 in 309 homes
Number of homes: 410,031 (the least)
Foreclosures (April 2012): 1,326 (23rd least)
Home price decline from peak: -19.3% (25th largest decline)


Home prices in the Salt Lake City area declined by roughly 20 percent from their peak in 2007 to the fourth quarter in 2011, which is a modest decline compared to other regions on this list. Nevertheless, foreclosure rates were higher than all but five of the largest metros in the country. Compared to the 1,406 foreclosures in April of 2011, April 2012's foreclosures declined by 5.7 percent. This metro area is one of the few on the list that analysts are bullish about; home prices are projected to increase by 9.5 percent from this year's fourth quarter to the fourth quarter in 2013.


See foreclosures for sale in Salt Lake City.


Foreclosure rate: 1 in 298 homes
Number of homes: 2,165,495 (ninth most)
Foreclosures: (April 2012): 7,271 (fourth most)
Home price decline from peak: -35% (14th largest decline)


As of the fourth quarter of 2011, home values in Atlanta fell by 35 percent from their peak. The Atlanta area has the ninth most housing units of any region on the list, at 2,165,495, and
the median price of these homes was just $110,000 in the fourth quarter of 2011. To make matters worse, the area's April 2012 foreclosure figure was a staggering 7,271 homes -- the fourth most among the nation's largest cities. Things may be on the upswing though -- since the number of homes in foreclosure fell by 11 percent from the prior month.


See foreclosures for sale in Atlanta, Sandy Springs and Marietta, Ga.



PHOTO: Matthew Paulson, Flickr.com

Foreclosure rate: 1 in 277 homes
Number of homes: 871,793 (23rd fewest)
Foreclosures: (April, 2012): 3,147 (twelfth most)
Home price decline from peak: 54.7 percent (fifth largest)


The first California metropolitan region on this list, the Sacramento-Arden-Arcade-Roseville area had one in 277 homes in foreclosure in April. With home prices down 54.7 percent from their high at the end of 2005, the Sacramento area registered the fifth-largest decline in home prices. The area had the twelfth-most foreclosures in the U.S. However, foreclosures are down by 39.01 percent from last year, when April 2011 had 5,160 homes in foreclosure. Additionally, the number of foreclosures also decreased by 26.7 percent from the previous month, from 4,294 to 3,147. Fiserv expects home prices in the area to rise 6.3 percent annually through the fourth quarter of 2016.


See foreclosures for sale in Sacramento, Arden-Arcade and Roseville, Calif.



PHOTO: absurd_hero, Flickr.com

Foreclosure rate: 1 in 273 homes
Number of homes: 2,464,417 (fifth most)
Foreclosures: (April 2012): 9,031 (third most)
Home price decline from peak: 54.2% (seventh largest decline)


The Miami metro region topped all Florida regions in the number of new foreclosures. It also ranks third in new foreclosure rates among the 50 largest metros with 9,031 foreclosures in April, 2012 -- a rate of one in 273. While foreclosures in the area decreased between March, 2012, and April, 2012, to the tune of 9.2 percent, the future appears gloomy. Prices in this region are forecast to fall another 3.8 percent between the fourth quarters of 2012 and 2013.


See foreclosures for sale in MiamiFt. Lauderdale and Pompano Beach, Fla.


Foreclosure rate: 1 in 249 homes
Number of homes: 840,343 (22nd fewest)
Foreclosures: (April 2012): 3,378 (tenth most)
Home price decline from peak: 61.8% (the largest decline)


Home prices in Las Vegas, the poster child of the housing crisis, plunged by 61.8 percent from their peak in early 2006 through 2011 -- the greatest decline of any of the nation's 50 largest metros. Although new foreclosures in the Las Vegas-Paradise region declined by 66.1 percent to 3,378 over the past year, the number of foreclosures in April represents a slight increase over March, when 3,301 new homes were in foreclosure. Making matters worse, prices are expected to fall by another 3.3 percent between the fourth quarter of 2012 and the fourth quarter 2013, according to Fiserv.


See foreclosures for sale in Las Vegas and Paradise, Nev.

Foreclosure rate: 1 in 213 homes
Number of homes:1,500,344 (14th most)
Foreclosures: (April 2012): 7,049 (fifth most)
Home price decline from peak: -56.6% (second largest decline)


As of the fourth quarter of 2011, prices in the Riverside metro area fell by 56.6 percent from their peak, the second largest drop among top-50 metros. In addition, this region is first in terms of now foreclosure rate, at one in 213. While the number of homes (1.5 million) ranks 14th of the 50 largest regions, the area's new foreclosure count for April, 2012, reached 7,049 -- fifth highest overall. It appears, however, that, the situation is improving; between March  2012 and April 2012, foreclosures dropped 10.8 percent.


See foreclosures for sale in Riverside, San Bernardino, and Ontario, Calif.


PHOTO: Don Barrett, Flickr.com

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