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TwitterProbably like a silver lining to the dark cloud of the foreclosure crisis, RealtyTrac Inc. said on Thursday that the number of U.S. households facing foreclosure in February grew 6 percent from a year ago, the smallest annual increase in four years. A state wise analysis reveals that foreclosures declined on a monthly basis and yearly basis in the hard-hit states of Nevada (One in every 102 Nevada housing units received a foreclosure filing), Arizona (1 in 163 homes received a filing) and California (15% year-over-year decline), but still grew rapidly in Florida. Banks claimed nearly 79,000 homes last month, down 10 percent from January but still up 6 percent from February 2009.
All the same, the situation remains grim for many homeowners who are being evaluated for help under loan modification programs. Analysts claim that many of them might end up losing their homes, thus increasing the number of foreclosures this year.
Foreclosure Filings Increase at Slowest Pace
Foreclosures are by far one of the biggest threats to the U.S. housing market, which remains highly vulnerable to setbacks and heavily reliant on government intervention. If foreclosures keep dropping, it will be one of the strongest signals yet the market is on the path to recovery. Yet, the numbers might just hide more than they reveal, as is classically said. According to experts these do not necessarily imply that lesser number of homeowners are in distress, or risk foreclosure, and may simply mean that foreclosure-prevention programs are limiting the monthly foreclosure activity.
“It’s premature to declare victory just yet,” said Rick Sharga, a RealtyTrac senior vice president. He did, however, allow that, “If this is the beginning of a slowdown in growth rates, that would be a good thing.” It is interesting to note that in another report by Mortgage bankers Association, the perecentage of borrowers, who had missed just one payment on home loans fell to 3.6% in the October to December quarter, from 3.8% in Q3. However, the number of borrowers who have either missed a payment or are in foreclosure was at 15 percent. A record 2.8 million households were threatened with foreclosure last year, and the number is expected to rise to more than 3 million homes this year. The news is being treated with mixed reaction because int he third quarter last year too, the housing figures had shown an upward trend but did not last long.
The prolonged crisis has the federal government to chalk out a bailout process for those in need to find help. It is only a shame that the Obama Administration’s $75 billion foreclosure prevention program has helped only 116,300 homeowners in the past year. At many of the 100 mortgage companies charged with running the program, employees still “don’t really know what the guidelines are — or refuse to adhere” to them, said Cheryl Cassell, manager of housing counseling at the National Community Reinvestment Coalition, a community group in Washington.
The problems though, are manifold. Foreclosed homes are typically sold at steep discounts, lowering the value of surrounding properties. Cities lose property tax dollars from homes that sit empty and lower property values. Economic woes, such as unemployment or reduced income, are expected to be the main catalysts for foreclosures this year.
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