U.S. Foreclosure Filings Double in First Quarter, Led by Nevada
U.S. foreclosure filings more than doubled in the first quarter as payments rose for subprime adjustable mortgages and falling home prices left property owners unable to sell or refinance without losing money.
Almost 650,000 properties were in some stage of foreclosure during the quarter, or 1 in every 194 U.S. households, Irvine, California-based RealtyTrac Inc., a seller of foreclosure data, said today in a statement. The number was 112 percent above a year ago. Nevada, California and Arizona had the highest rates.
The median U.S. home price may drop by a record 5.8 percent this year, Fannie Mae, the world's largest mortgage buyer, said April 7. Congress, the Bush administration and regulators have urged lenders to renegotiate terms for borrowers so they can stay in their homes, easing the glut of empty houses. Such efforts may mask the slump's extent by delaying foreclosures, RealtyTrac Chief Executive Officer James Saccacio said in the statement.
“This country needs a cleansing,'' billionaire real estate investor Sam Zell, chairman of Equity Group Investments LLC, said yesterday at the Milken Institute Global Conference in Los Angeles. “We need to clean out all those people who never should have bought in the first place, and not give them sympathy.''
About $460 billion of adjustable-rate loans are scheduled to reset this year, according to New York-based analysts at Citigroup Inc.
A surge in defaults among subprime borrowers spurred the collapse of the U.S. home loan market last year and caused more than $300 billion in writedowns and losses at banks and securities firms around the globe. More than 100 mortgage companies have stopped lending, closed, or sold themselves.
Price Slump
Home prices in 20 U.S. metropolitan areas fell 10.7 percent in January from a year earlier, the most on record, declining for the 13th straight month, according to the S&P/Case-Shiller home- price index. A record 18.6 million homes stood empty in the first quarter, the U.S. Census Bureau said yesterday.
Government attempts to slow the flood of defaults “could be simply deferring another flood of foreclosures,'' Saccacio said in the statement. “That could extend the length of time it takes the market to recover from this downward cycle.''
Philadelphia last month issued a moratorium on seizures to give so-called workout plans a chance to succeed.
The subprime borrowing spree featured lax lending standards that allowed people to buy homes with little or no down payment, and many of those borrowers today have no incentive to pay off mortgages that are worth more than the homes they bought, Zell said no fax payday advances.
“That whole process has to be liquidated,'' Zell said.
Nevada, California
Nevada led the nation with the highest foreclosure rate in the first three months of the year. Filings rose 137 percent to 19,595 from the year-earlier period. One in every 54 households there was in default or foreclosure, said RealtyTrac, which counts default notices, auction notices and bank repossessions and has a database of more than 1 million properties.
California had the most filings at 169,831, and the second- highest rate at one for every 78 households. Arizona had the third-highest rate, one in every 95 households. Florida was fourth at one in 97.
The foreclosure rate was one in 110 in Colorado, one in 166 in Massachusetts, one in 202 in Maryland, one in 265 in New Jersey, and one in 550 in New York, according to the report.
California cities had six of the top 10 highest metropolitan area foreclosure rates. Stockton ranked first at one filing for every 30 households, almost seven times the national average. The city of more than 285,000 people claims to be California's 13th- largest.
Riverside/San Bernardino was second in foreclosures at one for every 38 households. Bakersfield was fourth, Sacramento was fifth, San Diego was ninth and Oakland ranked tenth.
Las Vegas, Detroit
Las Vegas had the third-highest rate, one for every 44 households. Detroit ranked sixth, Phoenix was seventh and Fort Lauderdale, Florida, was eighth.
Foreclosure filings were 23 percent higher in the first quarter than in the previous three-month period, according to RealtyTrac.
On March 18, the Fed cut its benchmark federal funds rate by 75 basis points to 2.25 percent, the sixth reduction since September as Chairman Ben Bernanke and the Fed governors try to avert the first recession since 2001. The central bankers are meeting today in Washington.
U.S. sales of existing homes probably will tumble to an 11- year low of 4.68 million this year, Fannie Mae, the world's largest mortgage buyer, said in an April 7 forecast. Sales should climb to 4.91 million next year, the Washington-based company said.
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