Foreclosures Begin Leveling Off in May

Irvine, CA, June 10, 2010--The number of mortgage holders facing foreclosure in May was slightly higher than a year ago but is lower than in April, according to tracking firm RealtyTrac.

The company said that about a third fewer people are receiving legal warnings that they could lose their homes. And foreclosures are receding in some of the hardest-hit cities.

Still, the number of foreclosures remains high.

A new wave of foreclosures could be coming in the second half of the year, especially if the unemployment rate remains high and the economy doesn't improve fast enough to lift home sales.

"It's not anything like a recovery yet," said Rick Sharga, a senior vice president at RealtyTrac Inc.

RealtyTrac reported Thursday that nearly 323,000 households, or one in every 400 homes, received a foreclosure-related notice in May. That was up 0.5% from a year earlier but down 3% from April. The report tracks notices for defaults, scheduled home auctions and home repossessions.

However, the number of homeowners who lost their homes to foreclosure hit a record of nearly 94,000 in May.

Economic woes, such as unemployment or reduced income, are the main catalysts for foreclosures this year. Homeowners with good credit who took out conventional, fixed-rate loans are the fastest growing group of foreclosures.

A record high of more than 10% of homeowners with a mortgage had missed at least one payment as of the end of March, according to the Mortgage Bankers Association. But the number of homeowners just starting to show trouble is trending downward as the economy improves.

Among states, Nevada posted the highest foreclosure rate in May. One in every 79 households there received a foreclosure notice. However, foreclosures there are down 16% from a year earlier.

Arizona, Florida, California and Michigan were next among states with the highest foreclosure rates. Rounding out the top 10 were Georgia, Idaho, Illinois, Utah and Maryland.