Foreclosure Filings Rise 71% 3Q 2008 vs. 3Q 2007

Not surprisingly, gloomy news on the housing front continues. Note that RealtyTrac data overstates the actual number of foreclosures, since it counts each court filing in the foreclosure process, and any foreclosure involves multiple filings. However, comparisons of activity over time are useful indicators.

Note that changes in various states to draw out the foreclosure process also means the increase in filings understates the deterioration in mortgage holder payments. From Bloomberg:

U.S. foreclosure filings increased 71 percent in the third quarter from a year earlier to the highest on record as home prices fell and stricter mortgage standards made it harder for homeowners to sell or refinance, RealtyTrac said.

A total of 765,558 U.S. properties got a default notice, were warned of a pending auction or were foreclosed on in the quarter, the most since records began in January 2005, the Irvine, California-based seller of default data said in a statement today. Filings rose 3 percent from the second quarter and fell 12 percent in September from August as state laws created to keep people in homes slowed the pace of defaults.

“I wouldn’t be surprised to see foreclosures increase as the economy slows down,” Rick Sharga, executive vice president for marketing at RealtyTrac, said in an interview. “The people living paycheck to paycheck are at risk if they lose their jobs. It will cause more people to lose their homes.”…

A new law in California, which accounted for 27 percent of the foreclosure filings in the third quarter, helped slow the process in September as notices of default dropped 51 percent compared with the previous month, RealtyTrac said. In North Carolina, default notices fell 66 percent last month after lawmakers required lenders to give homeowners an additional 45- day notice.

In Massachusetts, filings rose 465 percent in September from August after a law was passed requiring a 90-day notice before foreclosures could proceed, RealtyTrac said.

After a summer lull, defaults “jumped back up close to the level we were seeing earlier in the year,” James Saccacio, chief executive officer of RealtyTrac, said in the statement….

“The length of the recession will depend on how this bleeds over to employment,” he said. The housing bust is the main reason more than 98,000 jobs in Florida and 77,700 in California were lost in the year through August, Brinkmann said.

Six states accounted for more than 60 percent of defaults in the third quarter, led by California with 210,845 foreclosure filings, more than double the amount from a year earlier, according to RealtyTrac. Florida more than doubled its total to 127,306 from the same period a year ago and Arizona almost tripled to 40,419. Ohio, Michigan and Nevada reported third- quarter filings of more than 30,000 each.

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  1. Juan Cristobal Federico Chihuahua de la Vega

    A bit tangential, but one bank I haven’t heard about in terms of how they are weathering the financial and mortgage crises (ok, maybe it’s just one crisis), is USAA. They seem pretty tight-lipped about their status. Any word out there on them?

  2. Anonymous

    Good question concerning USAA. I know they changed their membership requirement. Was, an officer in the military. Now, any military with a honorable discharge.

    With USAA offering insurance, investment and banking I doubt changing membership requirement was because everything is wonderful.

  3. Anonymous

    “….$40 billion is nothing. Below are real-time foreclosure stats for CA. Remember, CA is 35% of all defaults and foreclosures by count and 45% by dollar volume. While its nice to see this topic addressed $40 billion is not much considering int he state of CA, total Notice-of-Defaults and actual Foreclosures are averaging about $28 to $30 billion per month. This means on a national level, roughly $70 billion. Given this $40 billion makes for a nice headline but in the grand scheme of things, means very little….”

    Quoted from Mr. Mortgage website.

  4. doc holiday

    Kind of OT, but:

    We just had a huge expansionistic bubble with homes, autos, malls and a tsunami of credit expansion and now, we are to sit back and depreciate this and then re-prime the expansion pump for another tsunami? I guess we will re-value homes, cars, retail goods, etc, but what does this imply for future growth, if the past 8 years of economic expansion, is essentially, exactly like a car being driven off a dealership lot, and then plummeting in value — what’s the point? This obviously supply driven with too much consumption and zero future value, i.e, an Ownership Society that is a Disposable Society that thrives on waste an zero accountability! Bah Humbug!

    Re: A capital consumption allowance is that portion of the gross domestic product of a nation that can be attributed to depreciation. In effect, the capital consumption allowance is a means of allowing for the fact that that there is a need for the replacement of resources in order to maintain a given level of productivity in the nation. The capital consumption allowance actually addresses two aspects of the capital of a given country.

  5. SpeciousRiches

    I just wrote about housing this morning. We have just gone through the first wave of subprime ARM mortgage resets. Next up are Alt-A ARM resets. How much different is the credit quality of Alt-A and is it enough to offset the fact that Alt-A issuance peaked later meaning many more Alt-A mortgages are under-water.

    And then we have option ARMs… I can’t see housing being anything but a major headwind for the economy for the next 5 years at least. Are equities really pricing in no or negative growth for 2 year, maybe more?

    I don’t know the answers, but if someone can cheer me up by telling me we are near a bottom I would be extremely grateful!


  6. Flow5

    “since it counts each court filing in the foreclosure process, and any foreclosure involves multiple filings”

    (1) The number of foreclosures, and (2) the number of duplicate filings, certainly are not independent from each other (over time, or otherwise). This is true of many economic statistics.

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