Foreclosure Rate Drops!

The number of homes seized by banks, sold at foreclosure auctions, or that slipped in default dropped by more than 7,000 (or 2 percent) in February, according to data firm RealtyTrac.

That's great news for anyone worried about the value of their home or the strength of the economy.

For months, the threat of a new wave of home loan foreclosures has been the monster under the bed for housing economists. There are now about 1.8 million homeowners who are several months late in their mortgage payments, according to recent reports. If they all lose their homes, the deluge of new foreclosures could damage banks, again, and send home values back down, again.

Many of these foreclosures-waiting-to-happen are now in the federal Home Affordable Modification Program, which is designed to change loan terms and prevent foreclosures from happening. Many pundits and economists have given up on the program, though it shown new signs of life in recent months. Nearly 200,000 homeowners had been approved for permanent loan modifications as of the end of January.

"Foreclosure prevention programs, legislation and other processing delays are in effect capping monthly foreclosure activity -- albeit at a historically high level that will likely continue for an extended period," says James J. Saccacio, chief executive officer of RealtyTrac.

To get to a normal level of foreclosures, the rate of foreclosure filings would have to be cut in half. There were 308,524 foreclosure filings in February. There have been well over 300,000 foreclosure filings a month since February last year, peaking in July at 360,149 filings.

Bank repossessions were reported on a total of 78,683 U.S. properties during the month, a 10 percent decrease from the previous month but an increase of 6 percent from February 2009. Bank repossessions were down nearly 15 percent from their peak of more than 92,000 in December 2009 but were at nearly twice the level reported in February 2006.

Foreclosures are having a outsize effect on a few states, while the rest of the country is relatively foreclosure free. Close to two-thirds of February's home loan foreclosure filings are concentrated in the top six foreclosure states, according to RealtyTrac: Nevada, Arizona, Florida, California, Michigan, and Utah.

Foreclosure Filings by Month

February, 2010: 308,524
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

(Information from RealtyTrac.)
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