Foreclosures Show No Signs of Slowing in October

Irvine, CA, Nov. 13, 2008--Another 84,868 homes were lost to foreclosure in October, according to a new report by RealtyTrac.

Last month 279,561 borrowers received foreclosure filings, including default notices, notices of auction sales and bank repossessions, RealtyTrac said. That's up 5% from September, and up 25% from October 2007.

"October marks the 34th consecutive month where U.S. foreclosure activity has increased compared to the prior year," said James J. Saccacio, chief executive officer of RealtyTrac, in a press release.

A total of 936,439 homes have been lost to foreclosure since the housing crisis hit in August, 2007.

Foreclosures hit a record high in August when 304,000 homes were in default and 91,000 families lost their houses. Since then, a number of states have adopted legislation to freeze foreclosures and give homeowners a chance to modify their mortgages. These laws have helped slowed the rate of foreclosures.

"The really sobering reality for us is that despite these various state programs that are artificially keeping the numbers down, we are still up 25% from a year ago," said Rick Sharga, Realtytrac senior vice president.

Home prices have been on a steep decline, with 20 major markets plunging a record 16.6% year-over-year in August according to the most recent data from Case-Shiller. That index has recorded declines for 25 consecutive months.

A a new law in California, one of the hardest-hit states in the housing crisis, requires banks to contact struggling homeowners 30 days before delivering a notice of default, to give them time to restructure their plans.

Thanks to that legislation, foreclosures in the state fell 18% from September. But California still had the highest number of foreclosures in the country for October, logging 56,954 filings. That total was down from a peak of more than 100,000 filings in August, but up 13% from October 2007.

"While the intention behind this legislation - to prevent more foreclosures - is admirable," said Saccacio, "without a more integrated approach that includes significant loan modifications, the net effect may be merely delaying inevitable foreclosures."

The delays may also be masking the problem, he said. "The apparent slowing of foreclosure activity understates the severity of the foreclosure problem in these states," Saccacio said.

Nevada had the highest rate of foreclosures of any state for the 22nd consecutive month in October, with one in every 74 housing homes receiving a foreclosure filing. Arizona had the second highest rate in October, with one in every 149 housing units in default. Florida was third, with one in every 157 homes there in default.

And Sharga notes that fixing existing loans is only part of the equation; banks must resume lending to new borrowers. "Just freeing up some funds for qualified home buyers would make a huge difference in getting the housing market back on its feet," he said.