Foreclosures Surge 9% in July as Banks Crack Down

Foreclosures Surge 9% in July as Banks Crack Down

WashingtonPost.com
Friday, August 13, 2010
By Alex Veiga
LOS ANGELES -- The number of U.S. homes lost to foreclosure rose sharply in July, as lenders took back more properties from homeowners who had been in default for months on end.

Lenders repossessed 92,858 properties last month, up 9 percent from June and an increase of 6 percent from July 2009, the foreclosure-listing firm RealtyTrac said Thursday.

Banks have stepped up repossessions this year to clear out the backlog of bad loans. July marks the eighth consecutive month that the pace of homes lost to foreclosure has increased on an annual basis.

Still, the number of homeowners who have fallen behind on their payments remains high, and these borrowers are being allowed to stay in their homes longer. That's partly because lenders are reluctant to add to the glut of foreclosed homes on the market. They also are swamped with an unprecedented number of defaulting properties and have been overwhelmed by the volume.

The number of properties receiving an initial default notice -- the first step in the foreclosure process -- rose 1 percent last month from June but was down 28 percent compared with July of last year, RealtyTrac said. Initial defaults have fallen on an annual basis for the past six months.

The latest data reflect a foreclosure crisis that continues to drag on as many homeowners struggle to make their monthly payments amid high unemployment, slow job growth and an uneven rebound in home prices.

Among states, Nevada posted the highest foreclosure rate in July, with one out of 82 households receiving a foreclosure notice. Rounding out the top 10 states with the highest foreclosure rates last month were Arizona, Florida, California, Idaho, Michigan, Utah, Illinois, Georgia and Maryland.

Las Vegas continued to be the city with the highest foreclosure rate in the U.S., with one out of 71 homes receiving a foreclosure notice in July -- more than five times the national average.

Lenders are offering a variety of programs to modify their loans, but their success rates vary.

The Obama administration has rolled out numerous attempts to tackle the foreclosure crisis but has made only a small dent in the problem. More than 40 percent of participants, or about 530,000 homeowners, have fallen out of the administration's main effort to assist those facing foreclosure.

That program, known as Making Home Affordable, has provided permanent help to about 390,000 homeowners, or 30 percent of the 1.3 million who have enrolled since March 2009. RealtyTrac estimates more than 1 million American households are likely to lose their homes to foreclosure this year.

In all, 325,229 properties received a foreclosure-related warning in July, up 4 percent from June, but down 10 percent from the same month last year. That translates to one in 397 U.S. homes.

-- Associated Press