Foreclosure filings fall slightly, but still near record highs
Foreclosure filings fell about one percent in August to 358,471, but that's still 18 percent more than August 2008, according to RealtyTrac. A stronger sign that the market may finally have hit bottom is that real estate owned by banks dropped 13 percent in August compared with July. As long as this trend continues, July could be the record-high month for 2009.
RealtyTrac defines foreclosure filings as default notices, scheduled auctions and bank repossessions. In August, one out of every 357 U.S. houses received a foreclosure filing. The top foreclosure state is still Nevada, with one in every 62 houses subject to a foreclosure filing, but the number of foreclosure filings were down by 8 percent. Florida took the number two spot with one in every 140 houses receiving a filing and California was number three with one in every 144 houses getting a filing.
California is number one in total number of foreclosure filings, with 92,326 houses getting a filing in August, but that's down by 15 percent since July 2009 and down 9 percent from August 2008. While California does seem to be on a downward trend the same can't be said for Florida, which saw 62,401 properties hit with foreclosure filings. That's up 10 percent from July and up almost 42 percent from August 2008.
Michigan was number three with total foreclosure filings in August of 19,359. That's more than double the number of filings for July 2009 and up 42 percent from August 2008. Michigan was hard hit by layoffs as the automotive industry collapsed and GM and Chrysler went into bankruptcy.
We may finally be seeing foreclosures at least level off as Obama's Making Homes Affordable program ramps up. Even Bank of America (BAC), which had the worst record in July, increased its participation in the program in August and expects to reach its goal of 125,000 loan modifications by November. Banks dragged their feet on the program until the Obama Administration embarrassed banks with its first report in July .
When the Making Homes Affordable program was first announced last February, Obama promised to help four million people keep their homes and avoid foreclosure. He promised another four to five million people affordable refinance terms so they could escape variable-rate mortgages soon to reset or high-interest rate mortgages.
We won't know for certain whether July is the peak month for foreclosures, but this initial evidence may prove that it is, especially since banks are finally on board to try to help people stay in their homes with reasonable mortgage modifications. The backlog of foreclosure sales and short sales must be cleared out before we'll see any significant improvement in the housing market.
Lita Epstein has written more than 25 books including The 250 Questions You Should Ask to Avoid Foreclosures and The Complete Idiot's Guide to Improving Your Credit Score.