Foreclosure Filings Up 81% In 2008

WASHINGTON — More than 2.3 million American homeowners faced foreclosure proceedings last year, an 81 percent increase from 2007, with the worst yet to come as consumers grapple with layoffs, shrinking investment portfolios and falling home prices.

Nationwide, more than 860,000 properties were actually repossessed by lenders, more than double the 2007 level, according to RealtyTrac, a foreclosure listing firm based in Irvine, Calif., which compiled the figures.

Moody's Economy.com, a research firm, predicts the number of homes lost to foreclosure is likely to rise by another 18 percent this year before tapering off slightly through 2011.

Still, foreclosures _ which keep breaking records going back 30 years, according to the Mortgage Bankers Association _ are likely to remain well above normal levels for years to come, and that will continue to keep home prices from rebounding.

"Hitting bottom is a lot different than coming off the bottom," said Christopher Thornberg, a principal with Beacon Economics in Los Angeles.

The RealtyTrac report comes as Democrats, including President-elect Barack Obama, develop plans to use up to $100 billion of the remaining $350 billion in financial bailout money in an attempt to prevent the foreclosure crisis from getting even worse.

The four states with the highest foreclosure rates last year were Nevada, Florida, Arizona and California.

More than 1.1 million properties in those four states received a foreclosure notice, almost half the national total. And more than one in five of those households were in California, which is coping with massive job losses in the housing and mortgage industries as well as a rapid decline in home prices.

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Among metro areas, Stockton, Calif., was first, with 9.5 percent of all housing units receiving a foreclosure filing last year. It was followed by Las Vegas, Riverside and Bakersfield, Calif., and Phoenix.

In December, more than 303,000 properties nationwide received at least one foreclosure notice, up more than 40 percent from a year earlier and up 17 percent from November, according to RealtyTrac.

Nearly 79,000 properties were repossessed by lenders in December, a 61 percent increase over a year ago.

New state laws, particularly in California, Massachusetts and Maryland, that required giving homeowners advance notice of foreclosure proceedings, reduced filings in several states. But the effect of those laws has worn off, and lenders appear to be going ahead with foreclosure, rather than trying to modify loans.

"If all you're doing is basically giving a stay of execution, then the inevitable will follow," said Rick Sharga, RealtyTrac's vice president for marketing.

Foreclosures would have been about 10 percent higher in California last year, Sharga said, if it were not for a law requiring lenders to give borrowers a 30-day warning before starting the foreclosure process.

Meanwhile, the president of the Federal Reserve Bank of Philadelphia said Wednesday he expects the economy to slowly start recovering in the second half of 2009 and inflation to remain below 2 percent over the next year.

In a speech at the University of Delaware, Charles Plosser also said that the unemployment rate probably won't drop anytime soon, but that he doesn't expect it to rise to double digits, as it did during the recession of the early 1980s.

"I expect the housing sector will finally hit bottom in 2009 and the financial markets will gradually return to some semblance of normalcy," said Plosser, adding that the current recession could be one of the longest in the post-World War II era.

___

On the Net:

RealtyTrac Inc.: http://www.realtytrac.com

Comments

[Suzeeq]

Peter007, check out this article: Who Cooked the Worlds Economy:

http://www.truthout.org/013009T

I think you will find it interesting. It is a much bigger problem and you will see that you cannot simply blame the homeowner.

[Peter007]

A lot of the housing problem has to do with raising the number of people that own a home from about 65% to 75%. It may have been a noble idea, I don't know.,,,.
It may have worked except for the fact that housing prices went into a bubble and the bubble burst. Had housing prices stayed high or if they didn't balloon to ridiculous levels, we may have kept the ownership rate at 75%. Now its dropping back to 65%. The bubble or the dropping of home prices, is the reason home ownership is dropping. If the price level of houses stays the same or rises slowly ( 3 to 6% a year). We can begin to increase the ownership percentage back up to 75%. These are the people that will buy up the inventory. Foreclosures weren't caused by people that couldn't afford the house, it is caused by the dropping of home values. If values had remained constant, we'd have half the number of foreclosures and we won't have had the collapse on wall street.

[Waubay]

That last paragraph tells me that these guys are outright lying to avoid panic. There is no data that supports a bottom even in the next two years. With huge excesses in inventory, another big bunch of adjustable rate resets coming up in 2009 and 2010(followed by more foreclosures) and unemployment only going up how could there possibly be a bottom this year. We will hit a bottom when all the excess housing inventory is bought up. Does anyone believe that is going to happen even in the next five years? Banks will only take excellent credit scores and 20% down. I'd like to see what percentage of the mortgages made even during the good times fit this criteria. Bet it is pretty low. Massive excess inventory and very few qualified buyers tell us that a bottom is a long way away. If you are trying to sell a house right now cut the price as low as you possibly can, even at a loss, because things are not going to get better any time soon.

[leeman79]

Have you had enough of your free market, supply side nonsense now? Relocate all retardicans to the western interior now.

[Peter007]

You mean move Washington to the mid west?
The last I heard was that the Obama administration is depending on the free market to get us out of the economic problems. Listen to what he says. The stimulus plan is an attempt to jump start the private economy.
I think if you think Obama is going to follow the Fidel Castro economic plan you may be disappointed. There are flights leaving Mexico City everyday to Havana. See you there.

[rabiddog6708]

Welcome to the Bu$h economy. Watch the rich snap up some cheap real estate as home prices plummet. Everyone else gets to rent.

[redhot200822]

I wish you people would stop stealing everything out of the place before you leave.

[wolf58]

I watch everyday and I have been listening about the housing crisis and to tell you the truth I am amazed that so many in the market and in government can’t seem to come up with a solution to this problem. It isn’t that hard to fix the problem.

Simply put all that would be needed is this. The federal government declares a national emergency. Mandate that all mortgage holder’s role back interest rates to 3 or 4 percent on all current mortgages without fee’s or applications. This would stop most foreclosures and would stop the downward slide of property values and in doing so would keep families in their homes. The banks would still make money, more than they would if they have a large holding of properties that are foreclosed generating nothing. Any new mortgages would be written using the current market rates. The upper and middle class would have extra money every month and they would be the ones to spend the extra cash shopping, new cars, dinning out etc. This would help the economy to the road to recovery.

This plan would cost the taxpayers nothing and wouldn’t require the large bailouts that we see currently being offered. Sometimes you just need to keep it simple.

[mrcontinental]

uh wolf...THEY don't want to solve the problem. They want to keep us afloat till this passes and start right back up so that by 2015 a starter home will cost $450,000 at 10 percent. Greed is good remember.

[LuckyBlessed]

Don't you know, greed is good.

Seriously, people who invest in US debt (like communist China, where Bush was for the Olympics) mortgage backed securities are expecting their money. If we don't live up to obligations some could get a little cranky ;
Yu Yongding, former advisor to China's central bank, put the matter bluntly:

``If the U.S. government allows Fannie and Freddie to fail and international investors are not compensated adequately,....`If it is not the end of the world, it is the end of the current international financial system.''

[LuckyBlessed]

Those who buy our Mortgage Backed Securities may not like this;
Yu Yongding, former advisor to China's central bank, put the matter bluntly:

``If the U.S. government allows Fannie and Freddie to fail ------and international investors are not compensated adequately,....`If it is not the end of the world, it is the end of the current international financial system.''

Instead of throwing all the TARP money at SPA trips and corp bonuses(already owed so they're not really bonuses) they should take the money and force new terms , new notes to be made lowering not just rates but the balances so it reflects the value and doesn't go over 30% of their gross pay and total DTI not over 41%(old underwriting standards, FHA manual underwrite standards).

[Peter007]

Bad idea. Again, you are rewarding people with gifts that made bad choices and punishing people that made the right choice. People in foreclosure already get two government subsidies that the taxpayer must contribute to.
Why not reimburse all the shareholders in the the major companies that lost money in the Market? Its the same principle. We could raise the money by putting a surcharge tax on everyone making less than $30,000/ year. Pay the tax or starve.

[redhot200822]

There's this little thing called contract law.

[wolf58]

contracts can be broken, and if the Fed's tell the banks no bailout monry unless they rewrite the loans the contract won't matter.

[sandiegoconservative]

The main source of the problem is people taking loans that they cannot afford. The one ray of sunshine I see at the end is that only those who can truly afford a mortgage will be able to get one in the end. Hopefully, lenders will get that right, as will borrowers. Owning a home is not a right.

[wolf58]

the bulk of the problem the intrest rates jumping 2, 3, or 4 percent. People have been paying their mortgage until the rates changes. The banks could have headed this off by rewriting the terms they got gready and now they have more homes that are generating zero income.

[Peter007]

Not necessarily true. People took out bad loans when real estate was rising 10 to 30% a year. People that were not home owners were missing out on that appreciation. For many people, their home equity is their life long savings.
The general population didn't establish the inflation rate for homes. The Federal Reserve and government have a big say in that.
If Inflation is at 15% and you are getting 3% in your savings account, would you keep the money in the account or would you spend it on stuff before the prices went up?
People react to economic conditions. Remember it was the Fed that raised interest rates that triggered the current crisis. Also, it was the government that required banks to use a new accounting rule, Mark to market. Had that rule not been in effect, things might have turned out differently.

[Peter007]

Sorry, I'm really getting tired of hearing people coming up with solutions like yours. Your basic plan is to suspend our constitution and install a dictator that does what he wants.
All dictators have noble ideas that are intended to help people who are suffering economically.
You hope the dictator will help housing but maybe he won't.
We have a free economy with private property rights in this country. The reason you need the president to declare an emergency is because the congress and the people and the courts won't go along with it. Hence, a dictator.
We have 200 years of rules and court cases in this country. We are not going have a communist revolution because a few people are losing their homes.

[coopersmom]

So you all know, there is an expected change in the Bankruptcy laws coming right after the inauguration. It will allow those filing Chapter 13 to request that their loans be modified based on the home's current valuation. What this means, is that, say you have a $450,000 mortgage and a home currently worth $250,000 with an adjustable loan. The Bankruptcy Trustee can reset your mortgage to it's current appraised value of $250,000, change the mortgage terms to something like a 6.25% fixed for 30 years and poof, your loan has been modified and your bank will have a very difficult time fighting this. The modification is no longer in their hands or based on a toothless "Violations" threat or hardship scenario.

So, if you still have significant income, are behind on your mortgage and debts, think about a Chapter 13 after January 20th. Might be the smartest thing you can do.

[Emlyn]

Good riddance to the banks. they deserve it.

[redhot200822]

So in the future, why would any bank give out a loan?

[KillTheMessenger]

By historic standards home prices are still too high. So why would a rational buyer invest in real estate?

[LuckyBlessed]

Depends how cheap you can get a home for.

Speaking of Bankruptcy, what I also heard from someone who works at the BK court is that Chase tried to get "relief" for a mortgage loan with no documents, note, mortgage, etc. So she asks the guy from Chase, "what's the difference b/w what you sold the home for and what they owned?" Chase, "We're not selling it." They're just going to let many of these properties go back and not pay taxes. I guess the TARP money will cover things.

[camper65]

And now the banks and auto lending companies are LOWERING the standards to qualify for a loan - which is exactly why the foreclosure rate is so high. "The definition of insanity is doing the same thing over and over again, expecting to get a different result".

[LuckyBlessed]

lol

[redhot200822]

Yep. We have a lot of idiots in this country.

[TotoToo]

Some people are deliberately foreclosing on their mortgages so they can get new, low rates. They end up paying no mortgage for months, if not years, then get a new mortgage at a low interest rates.

What about those who continue paying their mortgages, Where is their relief?

[Icantbelieveher]

That's my thought!!! Where's my check for the equity I lost?

[sandiegoconservative]

You won't get it. You paid your mortgage on time and were responsible. So was I. We are both saps!

[LINY516]

I'm glad you said SOME people are bilking the system.

There are many more who are trying to work with mortgage companies and credit card companies. These are good people who want to be responsible, even in light of the irresponsible behavior of politicans (in both parties) and of financial institutions.

They took away the one relief that could have saved many homes (the old bankruptcy laws for consumers). Of course they didn't really touch the laws for the corporations, who had abused the laws worse than the consumers. As we are learning, the old lie that corporations need to file for bankruptcy because they create jobs is a lie. Demand creates jobs, and demand comes from consumers. The largest class that makes the consumer base, which creates the most manufacturing jobs, are the middle class.

[redhot200822]

LOL. You are sooooooooooooooo mean and uncompassionate. Losers are people too. You know.

[1201SLD]

I have a Citibank mortgage. Never late on this or anything else, but going forward, who can tell?

I just spoke with a Citibank rep... Today I opened my credit card statement ... the rate had gone from 9.9% to 24.9%, and No, the 9.9% was not an intro or teaser rate. I asked how this could be. (Yes, we all know they can, legally, any time, any place.) I was told they were doing it across the board, no reflection on creditworthiness. I hemmed and wailed, and got the rate down to 10.9%. So, Yes, they are doing it, and Yes, we can complain and maybe get it (almost) reversed.

Seems to me that by hiking rates without "cause" (and even with "cause") when cost-of-funds (and rates on savings CDs) is so low, the banks are driving people toward delinquency and default, which of course just feeds the foreclosure bear.

Meanwhile, Nationwide and Citizens are requiring Florida homeowners'- and windstorm-policy holders to "reapply" instead of renewing. This is another repricing move which will feed the foreclosure bear.

[coldinmn]

We received a notice from Citibank on black Friday that the interest rate on our credit card doubled. When my wife called to complain she was given some line about how they were forced to take these steps in light of their worsening economic outlook. Her response was that, in light of our worsening economic outlook, we couldn't keep them as a credit issuer any more... canceled that card and opened one with our credit union instead.

but then, with no balance on our card, I'm guessing we're not exactly the type of customer they wanted anyway.

[LuckyBlessed]

"with no balance on our card, I'm guessing we're not exactly the type of customer they wanted anyway", I doubt our great Capitalist system would like the Chinese either, they are the savers buying our debt, and I believe they avg a salary of around $2,000 a year.

[sandiegoconservative]

I and a co-worker had this discussion on Wednesday morning. I cancelled a card and paid off a small personal loan I took out with Citi on Wednesday evening. He cancelled his card as well and knows someone else who did the same. What I find ironic is that in this time of great distress for them, I have no doubt a lot of people will be doing the exact same thing, thus worsening Citi's situation. Good for you for getting out of that situation.

[TheBlackCat]

Many credit card companies actually charge interest rates that are ABOVE their legal state limits for interest rates that businesses and individuals are held to (loaning at above this interest rate is considered loan sharking).

However, thanks to lobbying, credit card companies are immune to loan sharking laws.

[KillTheMessenger]

And what do you need a credit card for to begin with? Would it make more sense to lend money from the Mob if they promised to smash your little toe instead of your knee if you can't pay?

Jeez... people do not learn.

[maddie0001]

There's nothing wrong with a credit card if pay off the balance each month.

[Peter007]

You are getting screwed. The congress visited banking laws this past year when they changed bankruptcy laws. What the credit card companies are doing is wrong. You negotiated an interest rate and you should be able to keep that rate. Maybe your rate is being changed for any new purchases?. If thats the case, dump the card. If not, its breach of contract on the banks part.

[flyers]

What drives me crazy is that the Mortgage Companies/Banks should have not have been so easy to lend out these huge loans for everyone during the 'boom' period of 02-06. I could see this coming as I would see my property rise every year 20-30% and wonder how are people affording to move up? I stayed in my house and refinanced once, so I don't have this huge debt like alot of my friends. I just kept seeing houses rise and rise every year over 25% and avg Income rise only about 3% every year, something had to give?

The only way to combat this mess is have to let the market play out, and unfortunately these people will have to default. And yes I do have 2 friends who are in this position, so I am speaking from the inside, as I disagreed with their decision of buying the house they chose in the first place. The market will never get better until it hits bottom, and as long as there are bad mortgages still out there, the end is not near yet.

[Beernuts]

O.K. Mr Plosser. I'm all ears. What...oh great financial genius...is it you see out there that could possibly turn this around? Huge numbers of PERMANENT living wage jobs?? In Las Vegas, Phoenix, Detroit, Philadelphia, Los Angeles, Podunkville?? If NOT, then please keep your baseless opinions to yourself or possibly the next meeting of Grover Nordquists investment club. 2009 will be the most disastrous financial catastrophe to ever hit this nation and Mr. Plosser sees a "bottom" to the housing crisis? In his case, it is probably not THAT bottom he's peering into.

[DFL]

This is the economic mess the conservative republicans have given the USA, we tried it their way with trickle down economics and it failed! -time to start building the economy from the bottom up again and lets get back to pre-reagan tax rates for corporations and the rich people, make them pay their "fair" share of taxes again! also many american companies have a post office box in a building in the grand caymen islands so they can run their profits through there and avoid paying taxes and this must stop, they are helping america go bankrupt!

[netzwerg]

"also many american companies have a post office box in a building in the grand caymen islands so they can run their profits through there and avoid paying taxes and this must stop, they are helping america go bankrupt!"

Thats globalisation at its best, Mr. DFL.

[Peter007]

Sorry, you are wrong. Thats illegal. You are mixing up news stories about rich individuals that may have bank accounts in the Islands. The federal government wants account information on those accounts. Corporations can't make money in the US and divert it to another country. Its illegal and stupid.

[Lemmy]

We already have a progressive system in which the rich pay more both as a percent and in real dollars. The top 1% wage earners pay about the same amount of federal individual income taxes as the bottom 95% of tax returns.

If you raise taxes on corporations, they'll just move to countries with lower tax rates, hire less or pass tax increases on to consumers. You'll be voting for a tax hike on yourself essentially.

Keep spinning that story about the financial crisis. The facts are there and the majority of blame lays at the feet of the Democrats.

[Beernuts]

Nice try Lemming. Try this: 95% of the wealth or "value" of this country is controlled by 1% of the population. 650 trillion republican dollars have been squandered, stolen, stashed away, bundled into worthless paper, etc. Now give it your best shot and blame that on "Joe, the $14 an hour wage earner? Wait...I've got a better idea...go to Iraq...become an occupation correspondent...we could use some more of your Kool-aid induced sleuthing out of the facts.

[TheBlackCat]

Um, no.

Corporations feed us that line "if you hike taxes, then we'll leave, we won't put that money back in America."

Over 50% of AMERICAN corporations pay NO TAXES due to tax loopholes.

If you look at the companies that pay no taxes, these are the SAME companies that outsource as much work as possible, that lay off older workers to replace them with entry level guys they can pay far less, and that keep their bank accounts overseas.

But you just keep on believing that line of "Oh, we'll stay here and be good and put them oney back in the community so long as you do whatever our lobbyists tell you."

It's the little guys, the local stores, that keep money in their local banks and SPEND their earnings within their community, that pay their taxes.

But Americans would rather get a bigger TV at Walmart, who has evaded BILLIONS in taxes, than buy a smaller tv at a local store and keep that money in their community. The guys at Walmart who keep their money in the Cayman Islands, pay as little as possible in taxes, and spend their money at luxery stores in NYC.

The problem is not so much with Republicans though, though the Republican push for deregulation has hurt us dearly. It's with Americans who are addicted to living beyond their means. Americans who care more about material possessions than the welfare of their community.

[Peter007]

What are you talking about.? You are writing a bunch of left wing rhetoric. The ideas aren't connected to each other. I don't care if you have left wing policy ideas, just present them in a way that people can understand.

[IndependentMeans]

I am paying on time, with two job losses, and have asked GMAC to modify our 15 year loan to a 30 year, but they would rather we default. What kind of country is this? And they got bailout money!!!

[Fraugher]

Your suffering does not appear on a spreadsheet anymore than the environmental damage from a penny candy wrapper does.

[1201SLD]

If you default and they restructure your loan, they will get "special" funding and can lay it off to, Surprise!, the Treasury.