|ARM resets trigger huge rise in home
Bank repossessions up 90% in January; $460
billion in adjustable mortgages to reset this year
February 26, 2008
(Bloomberg)—Bank seizures of U.S. homes almost
doubled in January as property owners failed to make higher payments on
Repossessions rose 90% to 45,327 last month from the same period a year ago,
RealtyTrac Inc. said today in a statement. Total foreclosure filings, which
include default and auction notices as well as bank seizures, increased 57%.
“The most troubling thing is that we are seeing more and more of these
properties actually going all the way through the process and going back to
the banks,” Rick Sharga, executive vice president of RealtyTrac, said in an
Defaults among subprime borrowers and those unable to meet rising payments
on adjustable-rate loans drove foreclosure filings to the highest since
August and the second-highest since RealtyTrac started keeping records.
About $460 billion of adjustable mortgages are scheduled to reset this year,
raising minimum payments for borrowers, according to analysts at Citigroup.
More than 233,000 properties were in some stage of default last month. Total
foreclosure filings increased 8% in January from December, RealtyTrac said.
Nevada, California and Florida recorded the highest foreclosure rates among
the 50 states, said RealtyTrac, a seller of U.S. foreclosure statistics with
a database of more than 1 million properties.
The rate of foreclosure filings in Nevada continued to lead the nation, with
6,087 properties in default or having been repossessed. That’s 95% more than
in January 2007 and 45% less than in December.
California had the highest total number of default and foreclosures with
57,158 properties facing possible seizure last month. That was more than
double the year-earlier figure and was up 7% from December.
Florida had the second-highest number of homes in default or foreclosure
with 30,178 in January, more than double the figure for the prior year and
3% less than in December.
Arizona, Colorado, Massachusetts, Georgia, Connecticut, Ohio and Michigan
rounded out the top 10 states worst off in terms of missed payments and
property seizures, RealtyTrac said.
Cape Coral-Fort Myers, Florida, had the highest January foreclosure rate
among 229 metropolitan areas. Stockton, California, had the second highest,
followed by the Riverside- San Bernardino area.
New Jersey ranked 18th in terms of the proportion of households at some
stage of default or seizure, with 1.5%. New York was 30th with 0.6% of
households facing possible foreclosure.
U.S. home prices fell last year for the first time since the Great
Depression. That made it more difficult for homeowners to sell or refinance
properties encumbered by mortgages that may be higher than the value of the
houses themselves. Sales of existing homes fell last month to the lowest in
at least nine years, the National Association of Realtors said yesterday.
The median price of an existing home fell 4.6% to $201,100 from January
2007. The median for a single-family home dropped 5.1% to $198,700, and
condominium and co-op prices fell 1% to $220,400.
Banks may be forced to resell as many as 1 million foreclosed properties
this year, adding to a glut of inventory and forcing prices down even
further, Mr. Sharga said.
January was the sixth straight month with more than 200,000 foreclosure
filings, RealtyTrac said. The fourth-quarter total of 642,150 filings was
the most since the company began records in January 2005. More than 1% of
U.S. households were in some stage of foreclosure during 2007.