Foreclosure is everywhere. Rust Belt, Sun Belt, East Coast, West Coast. Americans are scrambling to keep their homes as the credit markets compress tighter and tighter, and servicers are operating loss mitigation departments at a frenzied pace.
As all the preceding transpires, homeowners and industry participants alike are looking for any clue pointing to when relief will come. None forthcoming, all those involved with foreclosure – whether banks, bureaucrats or mortgagors – have been settling for on-the-fly fixes to a long-term problem.
The numbers are troubling. In its U.S. Foreclosure Market Report for the third quarter, RealtyTrac reports more than 635,000 foreclosure filings (default notices, auction sale notices and bank repossessions) affecting nearly 450,000 properties.
These figures – a 30% increase from the second quarter and a nearly 100% increase from a year ago, according to the company – represent one foreclosure filing for every 196 U.S. households.
"August and September were the two highest monthly foreclosure filing totals we've seen since we began issuing our report in January 2005," comments James J. Saccacio, RealtyTrac's CEO. "Although not all areas are being hit as hard as others, the rise in foreclosures is quite widespread, with 45 out of the 50 states documenting year-over-year increases in the third quarter.
"Given the number of loans due to reset through the middle of 2008, and the continuing weakness in home sales, we would expect foreclosure activity to remain high and even increase over the next year in many markets," he adds.
RealtyTrac's report points to three states with the highest foreclosure rates: Nevada, California and Florida. Nevada's rate – one foreclosure filing for every 61 households – is staggering. The state's foreclosure rate represents a 23% increase from the previous quarter, but the year-over-year increase is more than threefold.
California, registering one foreclosure filing for every 88 households, experienced a 36% rise in rates from the second quarter – and nearly four times the number of foreclosure filings since the third quarter of 2006.
In Florida, one out of every 95 households recorded a foreclosure filing, according to RealtyTrac. This figure has increased more than 50% since the second quarter, and year-over-year foreclosure-filing volumes have doubled.
Default Research, another foreclosure research firm, largely confirms RealtyTrac's findings. According to the company, foreclosure filings in California have increased 422% since September 2006, while Florida's rate increased 316% during the same period.
"Many properties around the country – and especially in Arizona, California and Florida – are being returned to the banks through the foreclosure process," says Serdar Bankaci, president and CEO of Default Research.
"With escalating home inventories up, home sales down about 13 percent from last year and median home prices remaining relatively stable, the market is pretty dismal," he adds.
In Arizona, Default Research finds that the state's foreclosure-filing rate has increased 310% since last September.
Considering all these dramatic figures, a salient question presents itself: What can be done about the nation's escalating foreclosure problem? The federal government has implemented – or tried to implement – some helpful measures, but the overall stagnant housing and real estate finance market has been a counteractive presence.
However, some states and jurisdictions are taking matters into their own hands. For instance, the San Mateo County, Calif., Board of Supervisors voted unanimously last week to initiate a three-month suspension of new foreclosures.
The board and county have no legal standing to enforce the ordinance or exact penalties against lenders and servicers for noncompliance. Participation is voluntary, the county says, and the ordinance's supporters have simply asked that lenders take pause and communicate with troubled borrowers.
Although the ordinance is nonbinding, the board has taken a step toward putting the spotlight on the foreclosure problem in its county.
In Nevada, U.S. Sen. Harry Reid, D-Nev., has vowed to work with lenders, servicers, credit counselors and the U.S. Department of Housing & Urban Development to assist Nevada residents who are facing foreclosure.
Through "mobile resource centers" that will travel among Nevada's hardest-hit counties – Clark, Douglas, Elko, Nye and Washoe – later this month, Reid hopes "local, state and federal agencies [can] come together to identify ways to help Nevadans."
Nevada Gov. Jim Gibbons has also attended to his state's foreclosure woes. Last week, his administration introduced a new Web site – www.ForeclosureHelp.nv.gov – to help homeowners. The site contains information about foreclosure options, directions for contacting servicers and advice about avoiding scams.
Additionally, Gibbons' office says it will hold housing fairs in Nevada to connect homeowners with lenders and servicers, nonprofit groups and other parties that can offer assistance.
Other states with high foreclosure rates have initiated similar tactics. Michigan, for instance, has set up a toll-free telephone number that troubled homeowners can call to secure counseling.
Also, state Rep. Terry Brown says he will host a town hall meeting on Monday, Nov. 5 in Millington, Mich., to disseminate foreclosure-related information to residents. Housing experts from the Human Development Commission will be on hand to explain loss mitigation options.
Like in Michigan, Iowa's attorney general implemented a mortgage foreclosure hotline in September. Recent reports note that the hotline received more calls than it could handle, necessitating the hiring of more operators. In the last six weeks, the service fielded nearly 3,000 calls.
Also, Kentucky has confronted foreclosures head-on. Last week, city leaders in Covington kicked off the "Don't Borrow Trouble" campaign, which is designed to fight foreclosure and predatory lending.
But states with the highest foreclosure rates are not the only areas of concern. Pennsylvania Gov. Ed Rendell and Philadelphia Mayor John F. Street announced two statewide mortgage foreclosure prevention programs last week.
Refinance to an Affordable Loan (REAL) and Homeowner Equity Recovery Opportunity (HERO) are designed to enable applicants to apply for a new loan if they cannot make payments and are at risk of foreclosure. Startup funding for the programs is provided by PNC Bank, the City of Philadelphia and the Pennsylvania Housing Finance Agency.
Additionally, foreclosure rates in Connecticut cities have risen significantly. In fact, RealtyTrac reports that foreclosure rates have increased 547% in the New Haven-Milford area, 522% in the Bridgeport-Norwalk-Stamford metro and 446% in greater Hartford year-over-year.
In turn, State Attorney General Richard Blumenthal says his office has been hammered with calls from troubled homeowners.
It is unclear where the housing and real estate finance markets will turn – and when – but it is evident that foreclosure has penetrated every corner of the U.S.