TOPICS > Economy

Foreclosure Rates for 3rd Quarter Up 70% From Last Year

BY Admin  October 22, 2008 at 8:58 PM EST

Foreclosed house; File photo

Nationwide, nearly 766,000 homes received at least one foreclosure-related notice from July through September, up 71 percent from a year earlier, according to a report from foreclosure tracking service RealtyTrac.

By the end of the year, RealtyTrac expects more than a million bank-owned properties to have stacked up on the market, representing around a third of all properties for sale in the U.S., the Associated Press reported.

Foreclosure filings — default notices, auction sale notices and bank repossessions — fell by 12 percent from August to 265,968 in September, Reuters reported. That means one in every 475 U.S. households received a foreclosure filing in September, the firm said in its report.

“We have never seen a foreclosure cycle like this one before,” RealtyTrac senior vice president Rick Sharga said of the figures, according to CNN. “In this cycle, we have foreclosure problems that have caused an economic downturn.”

California, Florida, Arizona, Ohio, Michigan and Nevada accounted for more than 60 percent of all foreclosure activity in the quarter, with California alone making up more than a quarter of all U.S. foreclosure filings.

Nevada posted the highest foreclosure rate in September, with an 11 percent increase from the previous month, according to RealtyTrac.

“Much of the 12 percent decrease in September can be attributed to changes in state laws that have at least temporarily slowed down the pace at which lenders are moving forward with foreclosures,” James Saccacio, RealtyTrac chief executive, said in a statement, according to news agencies.

Among the state measures, a California law requires lenders to make contact with borrowers at least 30 days before filing a notice of default and a new law in North Carolina resulted in a 66 percent drop in notices of defaults in September in that state.

Meanwhile, plans may be emerging to create a government loan-guarantee program that would serve as an incentive for lenders to modify home loans, the chairman of the Federal Deposit Insurance Corp said on Thursday, according to Reuters.

FDIC head Sheila Bair said the $700 billion financial rescue plan passed earlier this month gives the Treasury Department the power to use loan guarantees and credit enhancements to facilitate loan revisions and prevent avoidable foreclosures.

“Specifically, the government could establish standards for loan modifications and provide guarantees for loans meeting those standards,” Bair said in prepared remarks to be delivered before the Senate Banking Committee. “By doing so, unaffordable loans could be converted into loans that are sustainable over the long term.”