The unprecedented number of repossessions in April, combined with lower foreclosure filings, suggest that lenders are busy dealing with the backlog. Expect defaults to keep mounting, while prices fall in the period ahead. While the devastation continues in US housing markets, repossessions declined in the UK. See the following article from Property Wire for more on this.
Repossessions in the US set a record in April while foreclosure filings dropped for the first time in four years in what is seen as a sign that lenders may be delaying new default actions as they seize properties, according to a new report. But monthly foreclosure filings are expected to remain at a very high level as unemployment also remains high and more property owners find themselves in negative equity as prices continue to all in some areas, says the report from RealtyTrac.
‘Right now it appears that the banks are focusing on processing the loans already in foreclosure and slowing down the initiation of new foreclosure proceedings as a way of managing inventory levels. We’ll probably see this trend continue for a while,’ said Rick Sharga, RealtyTrac’s executive vice president.
A record 92,432 bank repossessions were reported in April, up 45% from a year earlier and 1% from March. Foreclosure filings, including default and auction notices, were 333,837, meaning that one out of every 387 US households got a filing.
About five million delinquent loans will probably end up in the foreclosure process in addition to the 1.2 million homes already taken back by lenders, Sharga said and added that defaults may not peak until 2011 depending on how lenders process them.
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More than a fifth of US mortgage holders owed more than their homes were worth in the first quarter of this year, according to a report from Zillow and property prices may fall as much as 5% in the next 12 months according to forecasts from IHS Global Insight.
The RealtyTrac report also shows that Nevada had the highest foreclosure rate for the 40th month in a row with one in every 69 households getting a notice, more than five times the national average. Bank seizures rose 57% from a year earlier and filings were little changed.
Arizona had the second highest rate with one in 169 households, or more than twice the US average, and filings fell 1% from a year earlier. Florida ranked third, with one in 182 households and filings there dropped 25%.
California had the fourth highest rate with one in 192 households, and Utah was fifth at one in 221. Idaho, Michigan, Illinois, Georgia and Colorado also ranked among the 10 highest rates.
In contrast in the UK repossessions fell 7.5% in the first quarter of the year as record low interest rates helped more households meet their payments, according to the Council of Mortgage Lenders.
However, CML director general Michael Coogan warned that this was no cause for complacency as a large number of households are ‘just coping’ and are vulnerable to any further shocks arising from the economic uncertainty.
This article has been republished from Property Wire. You can also view this article at Property Wire, a mortgage and real estate news site.