Banks move quickly to foreclose on homes after moratoriums lifted
President Obama's $75 billion incentive plan to encourage the mortgage industry to modify loans rather than foreclose homes was announced in March. The plan was going to help nine million borrowers avoid foreclosure, according to the administration, but based on April's figures it does not appear the banks have been taking that option seriously.
Rick Sharga of RealtyTrac told the Associated Press, "We've never seen two consecutive months like this. It's the volume that's surprising." I'm not sure why he found the volume so surprising. Everyone should have expected a major jump in foreclosure filings after the moratorium. Obama's incentive plan only impacts Fannie Mae and Freddie Mac loans, or loans guaranteed by one of the two, while many of the loans in trouble are subprime loans, Alt-As and other types of mortgages that do not comply to Fannie's or Freddie's standards.
The number of homes repossessed in April did go down to about 63,000 homes, but that number will likely go up soon as the homes just starting the foreclosure process move through it. Those repossessed homes will then be put back on the market at deeply discounted prices, driving the median home price down nationwide.
First quarter home sales fell around the country in all but six states, where foreclosures and short sales dominated the market: Arizona, California, Florida, Nevada, Minnesota and Virginia.
Nevada continues to hold the lead in foreclosure rates. One in every 68 households received a foreclosure filing, but that is down 18 percent from March. One in every 135 Florida homeowners received a foreclosure notice in April. California is a close third with one in every 138 households getting a foreclosure notice.
One in every 56 households in Las Vegas received a filing, making it the city with largest number of foreclosures filings. Cape Coral-Fort Myers was a close second with one in every 57 households receiving a filing. Other cities with high foreclosure rates included the California cities of Merced, Modesto, Riverside-San Bernardino, Bakersfield, Vallejo-Fairfield and Stockton. In Florida, the two hardest hit cities aside from Cape Coral-Fort Myers were Miami and Orlando.
Lita Epstein has written more than 25 books including The 250 Questions You Should Ask About Buying Foreclosures.