RealtyTrac. released a report today that showed U.S. home foreclosure filings in May were 18 percent more than the same period last. On the positive side, home foreclosure filings in May fell 6 percent from April. This report stated that more than 321,000 households received at least one foreclosure-related notice last month.
David Urani, an analyst with Wall Street Strategies, said:
“Let’s remember that this is the third biggest month of foreclosures filings in history, behind the past two months, so even though it fell by 6 percent, we’re still at 321,000 (homes) here and that’s a big number. A glut of home supply and continuing downward pressure on prices could also make the coming months difficult for homebuilders. It’s kind of a reminder that, even though we’re seeing these sales increases lately, there’s still a big time foreclosure problem out there, I think that’s snapping people back to reality a bit.”
In California, 92,249 properties were foreclosed in May, the highest total of any state and up almost 23 percent from May 2008, RealtyTrac reported.
Negative equity is a big deal no doubt but I believe that job loss is also what hasl really created a wave of foreclosures this year.
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One big reason loans will continue to default in mass is that no one can afford to sell their home. In my area condos sold for $430,000 to $490,000 are now being sold in foreclosure between $199,000 and $235,000!
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Given the ratio to income to sales price in California the foreclosure crisis will be a California problem for many years. Until the recent bubble lending 3 times income was a good yardstick but now it ranges from 6 to 10 times income and this has become the norm. A good example would be the city of Santa Rosa BMR problem that has a cap of 50K income for houses costing 304K using the FHA 3% down program. Low income cannot afford a 300K home; only in California is this type of thinking keep alive by local and state government. In fact the State yesterday wants to give low income families 100% financing for foreclosure homes in the most impacted parts of the state. These homes require extensive rehab which low income citizens do not have and will again provide a new wave of foreclosures in the coming years.
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I think you’re right, not all foreclosures are due to bad mortgages. I would imagine a healthy number are from folks being out of work too. High and prolonged unemployment has gotta spike the foreclosures.
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