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.

Story continues below

advertisement

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

[Krissycommunity]

I really think extended families are going to have to learn to live together in one home. If we would just learn to share our spaces, we could really save money.

Also, extended families living in close proximity can be beneficial­...grandpa­rents for babysitters and the sandwich generation could have some help keeping an eye on everyone.

We have just been so busy relocating and buying too much home. It won't be easy, but perhaps old-fashioned family living might be one solution.

Krissycommunity
Working hard at www.sccworlds.com

[IndependentMeans]

I agree with you. I told my spouse this very thing, we are going to have to go back to how they lived in the late 1800's. Our family is considering combining to one home in San Francisco.

[markinaz]

I'd rather not move in with any family member. Murder would surely follow.

[1201SLD]

I too agree, but one of the problems is that the other family-members may be locked into their houses and have to default, lose everything, in order to do the rational share-expenses thing.

[Icantbelieveher]

You don't know my mother!

[sandiegoconservative]

LOL!

[OkieMon]

again the housing bust as well as everything else in this economic collapse was caused by bush's 150 a dollar a barrel oil and the resulting tripling the cost of living under bush.....same thing happened in early 70s when oil went from 3 to 30 dollars a barrel...only this time both parents already have jobs so that cushion of forcing both parents to work starting in the 70s wasn't available now to save the country.... maybe polygamy with multiple parent households is an economic idea of the future.....

[Lemmy]

Housing bust caused by oil? That's a new one.

[OkieMon]

sure....the people at the bottom rungs of the mortgage ladder spent their money on living necessities rather than mortgage payments....

[martiniandabotoxchaser]

Foreclosures are a disaster. They escalate the problems in the economy by sticking banks with useless assets and building a glut of real estate on the market. The best plan would be to force people to keep their homes and their debt. Bankruptcy is an easy way out and its effects ripple through the economy dragging down many innocent people. The TARK money should go to deferring and extend mortgages. Banks and the government should create payment plan that will keep homes and debt in the hand of those who made the choice to own a home. This is the only way to minimize the impact of bad debt.

[alolita]

Agreed.

I wonder, How come this hasn't been considered, yet?

[netzwerg]

Chinese investment firms buy entire streets here in south Pittsburgh, not funny at all!

[jsgaetano]

The Bush Boom!!

[ohioan73]

I did a lot of research on foreclosures in NE Ohio when I a was com. org. in '01 and they had increased 500% in Cleveland/Cuyahoga County alone. Only Kucinich and Tubbs Jones would give our com. org. the time of day about this alarming increase in foreclosures that started in 1995 in coincidence with the first appearances of sub-prime lenders in the NE Ohio area in the mid-90s. Mayor Jane Campbell, Pres. of City Council Frank Jackson (now Mayor of Cleveland), several Ohio Senators and especially the one from our district (CJ Prentiss) all told us to go screw ourselves and our research. They were getting "campaign donations" from Household Finance, Countrywide, CitiFinancial and other predatory lenders. They did not care that people were being reamed out of their lives. This kind of pay to play corruption at the expense of people is what helped ruin our economy.

I want people to know how corrupt Ohio is. You can't trust your own party because Campbell, Jackson and Prentiss are all Democrats and they were the most snarky, cruel and cynical politicians I ever met. Kucinich is cool. Tubbs-Jones was wonderful (RIP). Fingerhut and Lawson-Jones are great. Everyone else in Ohio politics needs to be fired. I can't help but imagine the corruption going on in other cities. They need to be exposed and stopped.

[MajorKong]

Maybe selling our houses to each other wasn't the best thing to base the economy on.

[TheBlackCat]

heh, seems kind of obvious when you put it like that

[neocon666]

Or expecting people to buy a new car every two years, for that matter.

[rogerze]

There are plenty of honest people with good credit who deserve to buy cheap homes.

[leftcoastindy]

And the stupid or desperate ones will. The watch the value drop below what they owe just like a whole lot of other unfortunates.

[drymartini1]

NOBODY "deserves" to buy anything !! get that right first.

[Grannysue]

Thanks Bush, here's too your legacy!!!

[OneOleMan]

With today's mentality it's always easier to look for someone else to blame while not accepting any of the responsibility for ourselves. Each one of us, you and I included, is partially responsible for the financial problems we have today. Over the past five or 10 years how much money did you and I put away for that "Rainy Day"? Who was it who decided we should buy the home we truly couldn't afford? Was that old car/truck really on its last legs or could we have held on to it for a couple more years? How many credit cards did we have that were nearly maxed out?

You and I have to accept some of the responsibility for the financial woes of this country.

[markinaz]

No, just you.

[Samalabear]

"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."

Doesn't it drive you crazy, hearing this? It's already in the double digits if you take the real numbers into consideration. I remember the early 80s -- I was caught in that mess. From talking to people and reading articles it sounds like we are there and maybe worse already. The difference is you're not going to see a line around a new Friendly's opening, as I stood on a that time -- hundreds of people waiting to fill out applications for approximately 15 jobs. Online applications are the norm and in many ways that makes it even more difficult to get even the most menial jobs. Very impersonal and very difficult.

All I know is that stores are closing like crazy where I am -- Main Street stores. A lot of these people don't show up in the official figures either -- part-time or self-employed.

[Stud99]

Ded be ats

[leftcoastindy]

Do you really think anyone who loses their job is a deadbeat? If you lost yours and after searching for 5 or 6 months couldn't find another one that would come close to supporting your mortgage and your home was worth 20% less than you owe, would you be a deadbeat?

[rogerze]

You knew you couldn't afford to live in a home in the first place, now that your jobless maybe some reality will kick in.

[littlepuffycloud]

You're assuming 99 HAS a job.

[gjohntheterrible]

Bush's "Ownership society" in full bloom.

[Sundialsvc4]

It goes deeper than this: banks were happy to be "convinced" that asset prices would go up forever. So, they bundled-up all that debt and sold it. Vast amounts of "money" were created, and multiplied and multiplied, on the premise that "that thing in your hand" was much more than just a tulip-bulb.

"Okay, Erdgeist, if 'that home cannot be saved, nor should they" ... you now have (1) a =homeless= middle-class family now living outside in a tent in the dead of Winter, and (2) a =vacant= home that you (the bank...) now own, and it's full of "squatters" who are busy demolishing the wallboard and pissing (ahem...) on the floorboards. But you own it, and hundreds of thousands of homes just like it ... which you call "collateral."

In a word, Mister Bank, YOU are Bankrupt.

And, just as it did in the "Tulip Mania" days, the moment will finally come when you must "close your damned bankers-books and throw them collectively into the fireplace." The numbers don't mean anything. That money doesn't exist. What you HAVE is: a homeless family in a tent, and a demolished structure with piss on the floorboards and no walls. Those with the ability to buy the place wouldn't dream of doing so anytime soon. You have desperation and resentment. You're about to have an armed revolt.

THIS is the reality of economic collapse. People die.

[Erdgeist]

This is a complex issue for economists -- and more for the general public. That many home owners were deluded into believing the value of their homes would increase forever, and these same homes, in addition, might act as ATMs, paints a bleak picture of our economic future. Adding to the problem is the huge rise in unemployment which means even more foreclosures. To be realistic, home owners who speculated; who believed there would be no end to the housing market are going to be the big losers. Their homes can't be saved -- nor should they. Now the question remains, how do we stimulate the economy by increasing demand since supplying capital to the supply-side of the economy is largely ineffective? The only answer that can possibly be is that, as a nation, we must begin to supply all our own goods and services which means an end to the current practice of off-shoring and with it, labor arbitraging. To put it bluntly, we need to see a rise in products stamped "Made in America".

[Samalabear]

Amen to that. I am tired however -- as I heard someone else say last night -- that we will never start manufacturing regular goods here again. There's an interesting piece running on NPR right now about a guy who is buying products and meeting the people who make them -- in the USA. He visited New Balance the other day, who is purportedly that last remaining sneaker manufacturer in the USA. Now, as far as I know, and from what I've seen, New Balance is priced in line or lower than the crap made overseas.

I'm always hearing that the reason for off-shoring is Americans love cheap products. I don't see this at all. One of the problems is housing: If the average American is now spending more than half of their income to even modest housing (especially here on Long Island, where the situation is particularly dire), then we don't have an alternative than to buy cheap clothing. So if housing were left to market forces and prices forced to come down to the wage of the average American (one person, not the dangerous two-income situation it is today), and the normal one-third cost came into play, we could afford to make and buy American products. It's a thought. I don't know if I'm expressing it right. It's just how I see it from my own circumstances.

[strangerinthenight]

' am ambivalent to your theory, but it has valid logical integrity.

Manufacturing and Service sectors have been largley outsourced in China and India. I theorize both sectors will largely remain outside the US. Cost of Union Labor and benefits are prohibited. America led the Globalization, but was never prepared, at least in updating the skills of its labor force and technology. Case in point - the Big 3.

As to Mortgage Default, Statistics bear, homes purchased under the subprime - Fannie Mae and Freddie Mac were majority part of the housing crisis. Homes purchased under Prime/Standard are largely still safe. As industries closing, and middle class eroding, collectively will further damage the economy.

I conclude homeowners who purchased these properties never qualified, or their income ratio were insufficient to support those kind of mortgages. Studies further support Sub-Prime defaults were not instant occurrences, but history of not paying on time, or not paying them at all. It's hard to believe, that it alone caused our economy to tank.

On the otherhand, Infrastructure and environmental initiatives can never be outsourced, and for the most part, good paying jobs for our citizens. The problem, is lack of engineers, and highly skilled workforce. Support bees for constructions may be in a better shape but useless without these 2 initiatives. I further conclude, these initiatives will help revive the middle class.

Break is over. Thanks for a good conversation.

[strangerinthenight]

Should be " Cost of Union Labor and benefits are prohibitive"