The number of U.S. homes lost to foreclosure surged in July, as lenders take back more properties from homeowners who have been in default for months on end.
Lenders repossessed 92,858 properties last month, up 9 per cent from June and an increase of 6 per cent from July, 2009, foreclosure listing firm RealtyTrac Inc. said Thursday.
Banks have stepped up repossessions this year to clear out the backlog of bad loans. July makes the eighth month in a row that the pace of homes lost to foreclosure has increased on an annual basis.
Still, the number of homeowners who have fallen behind on their payments remains high, and these borrowers are being allowed to stay in their homes longer. That’s partly because lenders are reluctant to add to the glut of foreclosed homes on the market. They also are swamped with an unprecedented number of defaulting properties and have been overwhelmed by the volume.
The number of properties receiving an initial default notice – the first step in the foreclosure process – rose 1 per cent last month from June, but was down 28 per cent versus July last year, RealtyTrac said.
Initial defaults have fallen on an annual basis the past six months.
The latest data reflect a foreclosure crisis that continues to drag on as many homeowners struggle to make their monthly payments amid high unemployment, slow job growth and an uneven rebound in home prices.
Economic woes, such as unemployment or reduced income, are now the main catalysts for foreclosures. Initially, lax lending standards were the culprit, but homeowners with good credit who took out conventional, fixed-rate loans are now the fastest growing group of foreclosures.
Lenders are offering a variety of programs to help homeowners modify their loans, but their success rates vary. Hundreds of thousands of homeowners can’t qualify or fall back into default.
The Obama administration has rolled out numerous attempts to tackle the foreclosure crisis but has made only a small dent in the problem. More than 40 per cent, or about 530,000 homeowners, have fallen out of the administration’s main effort to assist those facing foreclosure.
That program, known as Making Home Affordable, has provided permanent help to about 390,000 homeowners, or 30 per cent of the 1.3 million who have enrolled since March 2009.
Still, RealtyTrac estimates more than one million American households are likely to lose their homes to foreclosure this year.
In all, 325,229 properties received a foreclosure-related warning in July, up 4 per cent from June, but down 10 per cent from the same month last year, RealtyTrac said. That translates to one in 397 U.S. homes.
The firm tracks notices for defaults, scheduled home auctions and home repossessions – warnings that can lead up to a home eventually being lost to foreclosure.
Among states, Nevada posted the highest foreclosure rate in July, with one in every 82 households receiving a foreclosure notice. The number of properties in Nevada receiving a foreclosure warning last month rose nearly 7 per cent from June, but fell nearly 30 per cent from the same month last year.
Rounding out the top 10 states with the highest foreclosure rate last month were: Arizona, Florida, California, Idaho, Michigan, Utah, Illinois, Georgia and Maryland.
Las Vegas continued to be the city with the highest foreclosure rate in the U.S., with one in every 71 homes receiving a foreclosure notice in July – more than five times the national average.