By Renae Merle
Washington Post Staff Writer
Friday, October 16, 2009
The number of homeowners pulled into the foreclosure crisis increased by 5 percent during the third quarter as a government program to help borrowers stay in their homes struggled to gain traction, according to RealtyTrac data released Thursday.
RealtyTrac found that more than 925,000 borrowers received a foreclosure filing, which can range from a default notice to a bank repossession, between July and September. That is up 23 percent from the comparable period last year.
The increase reflects an acceleration in the foreclosure crisis as more homeowners fall behind on payments and reflects the fact that banks are still working their way through a backlog of delinquent borrowers, according to RealtyTrac, which compiles data on more than 90 percent of U.S. households.
Many banks delayed foreclosures earlier this year to put in place a federal foreclosure prevention program. But by the third quarter, bank repossessions had resumed their climb, according to the RealtyTrac data. The number of homes taken back by lenders increased 21 percent during the third quarter to about 238,000, according to RealtyTrac.
"Some of those were homes that were maybe in limbo that were finally foreclosed on in the third quarter," said Daren Blomquist, RealtyTrac's spokesman.
The federal foreclosure prevention program, known as Making Home Affordable, reached a milestone last week after lenders signed up 500,000 borrowers. After getting off to a bumpy start, administration officials have said the program is gaining momentum.
But a recent report from the Congressional Oversight Panel, which is monitoring the government's Troubled Assets Relief Program, questioned whether the effort would meet its goals. For example, the program does not directly tackle two of the most pressing current causes of delinquencies: rising unemployment and risky home loans known as option adjustable-rate mortgages, which reset after the first few years to significantly higher payments.
Government regulators and lenders should consider a moratorium halting foreclosures of unemployed workers, said James H. Carr, chief operating officer of the National Community Reinvestment Coalition, a nonprofit group.
"We do need to think more carefully about a bridge so people aren't being kicked out of their homes as they are looking for employment," he said.
The industry will meet over the next month to discuss potential solutions, said John A. Courson, president and chief executive of the Mortgage Bankers Association.
Most of the foreclosure problem remains centered in hard-hit states such as Arizona and Nevada, according to the RealtyTrac data. In the Washington region, foreclosure filings dipped in the District during the latest quarter but were up in Maryland and Virginia.
In September, RealtyTrac counted about 340,000 foreclosure filings nationally. That is down 4 percent from August but represents an increase of 29 percent from September 2008. Banks repossessed nearly 88,000 homes in September, up from about 76,000 a month earlier.