Foreclosure continue to rise as banks work on backlogs
Friday, May 14, 2010
More people lost their homes to foreclosure in April as banks worked through a backlog of troubled borrowers, according to data released Thursday.
The number of homes repossessed, the final stage of the foreclosure process, reached 92,432 in April. That is flat from March, up just 1 percent, but represents a jump of 45 percent from April 2009, according to RealtyTrac, an online service that estimates it tracks about 90 percent of the housing market.
Foreclosures have been suppressed over the past year by government and industry efforts to keep people in their homes. But those efforts have largely faltered, leaving millions of distressed borrowers facing foreclosure. Now more people are expected to lose their homes as lenders work through a backlog of delinquent borrowers.
Home repossessions this year are up 27 percent compared with the first four months of last year, according to RealtyTrac, a foreclosure-listing firm in Irvine, Calif. They will probably continue to climb, company officials said.
"We have another two or three years before we're out of the woods," said Rick Sharga, vice president of marketing at RealtyTrac.
At the same time, the number of homeowners in trouble has started to plateau, albeit at a high level, according to RealtyTrac. Homeowners who received a default notice, the first legal step in the foreclosure process that typically occurs after a borrower has missed at least three payments, fell 12 percent in April compared with the previous month and 27 percent compared with April 2009.
That decline likely reflects that banks are more focused on clearing their backlog of borrowers in foreclosure rather than adding new homes to the system, Sharga said. "They are trying to control the inventory levels," he said.
Some economists fear that lenders will put their backlog of foreclosed properties on the market too quickly, depressing home prices in regions that are beginning to show signs of recovery.
Others argue that the properties are likely to be dribbled onto the market over several years, extending the foreclosure crisis but shielding the real estate market from another severe blow.
"I don't think we'll see the foreclosure numbers go down much in the foreseeable future," said John Taylor, president of the National Community Reinvestment Coalition.
"Meanwhile, we're adding foreclosures at a pace that foreclosure-prevention programs can't keep up with," he said. "If anything, we've pushed the problem into the future, which means that home foreclosures will continue to be a drag on the economy for at least five years."