The housing market crash was disastrous, housing recovery is taking longer than it should, and now foreclosure activity is at a 19-month high. Last month, May 2015, foreclosure activity rose again, and has risen a whopping 16% from May 2014. (Foreclosure activity is defined as foreclosure filings, default notices and scheduled auctions.)
Lenders reclaimed 44,982 homes last month, up 58% from a year ago and there were 49,413 properties scheduled for auction in May. Lenders and the courts are pushing foreclosure cases that have been sitting in limbo for years through the system as options to stop foreclosures are exhausted or left untapped.
Reasons for the spike today are following the same pattern right before the housing market crash eight years ago.
Subprime loans were only a part to what led to the housing market crash, there were also low-doc loans (loans given with no or low documentation needed). Other factors leading to the crash were; more than $750 billion adjustable-rate mortgages were originated, equity lines of credit were handed out like candy and used like ATMs, loans were given with no money down and new buyers who put 20% down avoided paying mortgage insurance.
Today, we are finding Home Equity Lines of Credit (HELOCs) and loan modification interest rate increases are contributing factors leading to more foreclosures. Are we headed towards another crash? Before we even recover from the last one?
Last month, 25 states posted increases in foreclosure starts (the first notice) including New Jersey posting a 73% increase and Virginia at 39% from the previous year. There were 26 states posting increases in foreclosure auctions with New York leading the way at a huge 119% increase. Among the largest cities in the U.S., 13 posted increases in foreclosures from Dallas (up 64%) to Seattle (up 10%).
Analysts all agree the housing recovery should be further along and foreclosures not rising at this time with some saying these month-over-month increases are fairly alarming.
The number of real estate owned homes (REOs) last month were twice as much as they were in 2005 and 2006 - right before the housing bubble burst. Homeowners who are losing their homes to foreclosure are above the pre-crisis level.
Nationally, one in every 1,041 housing units has a foreclosure filing. Florida has four cities with high foreclosure filings: Lakeland (one in every 331), Ocala (one in every 335), Miami (one in every 347) and Jacksonville (one in every 348) housing units.
Overall, Florida continued to post the highest foreclosure rates followed by New Jersey, Maryland, Nevada and Ohio.
If you are facing foreclosure, or need assistance with a lon modification, contact our foreclosure defense attorney, in Denver, at 303-618-2122.
Gantenbein Law Firm also practices Business Law, Tax Law and other Real Estate issues. Our attorneys are located in Denver, and serve clients throughout Colorado. For more information, visit our website at www.gantenbeinlaw.com.