Foreclosures Down, But Economists Still Dour

Bank foreclosuresFewer people are getting bad news in the mailbox: the number of foreclosure fillings dropped again in January, according to the latest information from RealtyTrac.

There were 315,716 foreclosure filings in January -- that's down 10 percent from December. Cheery news, at first glance. But more than 300,000 foreclosure filings in a single month is still tremendously bad. In Jan. 2008, before the full brunt of the crisis struck, the rate was just over 200,000 foreclosure actions a month. But that rate was enough to set into motion the chaos in the nation's bond markets that later spread to the rest of the financial system.

There have been well over 300,000 foreclosure filings a month for the last 11 months. Worse, a growing number of experts and economists seem to expect a new wave of foreclosure filings in 2010. That's includes the boss at RealtyTrac.

"If history repeats itself we will see a surge in the numbers over the next few months as lenders foreclose on delinquent loans where neither the existing loan modification programs or the new short sale and deed-in-lieu of foreclosure alternatives works," said James J. Saccacio, chief executive officer of RealtyTrac.Many commentators like Saccacio are writing off federal foreclosure prevention efforts. However, the federal government is working frantically to get its Home Affordable Modification Program to work and prevent new foreclosures from overwhelming the economy.

As of December 31st, about 110,000 permanent loan modifications had been approved by banks through the government's Home Affordable program. Most of those permanent modifications had been approved in the last weeks of the year. That's why many newspapers reported that only 66,000 permanent modifications had been finalized -- about 44,000 of the homeowners seeking modifications hadn't returned their signed forms yet.

Lenders have also approved more than 900,000 trial modifications, and federal officials spent much of January pressuring lenders to make decisions on as many of those trial modifications as possible. We'll see how well they did when Home Affordable releases its report for January, probably later this month.

Whatever the news is, it's likely to have a big effect on the rate of foreclosures.

Foreclosure Filings by Month

January, 2010: 315,716
December, 2009: 349,519
November, 2009: 306,627
October, 2009: 332,292
September, 2009: 343,638
August, 2009: 358,471
July, 2009: 360,149
June, 2009: 336,173
May, 2009: 321,480
April, 2009: 342,038
March, 2009: 341,180
February, 2009: 290,453
January, 2009: 274,399
December, 2008: 303,410
November, 2008: 259,085

(Information from RealtyTrac.)
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