Foreclosure Rates Up 30 Percent

Foreclosure actions were reported on more than 446,000 properties in third quarter ending in September, this is up 30 percent from the second quarter, and double last year’s third quarter.

This number brings the overall foreclosure rate in the US to one in every 196 homes. More than half of this total were in California, Arizona, Nevada, Ohio, Texas, Michigan, and Florida housing markets. Much of the problems that we are dealing with with these foreclosures are due to the sharp increases in borrower’s mortgage payments due to adjustable rate mortgage teaser rates expiring. Many economists are predicting home prices to fall ten percent before the market bottoms out sometime late 2008. However, because many of these teaser rates tend to last two to three years, the housing market will face further pressure next year from loans that were written in 2005 and 2006.

With foreclosure rates rising, federal and local officials are looking for creative ways to keep people in their homes and avoiding adding more unsold inventory to the housing market. Homeowners at risk are urged to contact their current lender to try and work out an alternative to foreclosure. However, as Countrywide stated late last month they can not modify certain loans that their servicing contracts specifically state can not be modified. They did end up modifying 5 percent of their loans, not including loans that they structured payment plans for. Also on October 10th Treasury Secretary Henry Paulson said an industry collation called “Hope Now” was working to help homeowners head off foreclosures and keep their homes.

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