Foreclosures hold steady from 2009; spots recede
6/10/2010WASHINGTON - The foreclosure crisis appears to be leveling off.
The number of people facing foreclosure is nearly flat from a year ago, according to the latest report from a private foreclosure listing service. 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 extraordinarily high. Experts caution that a big reason for the stabilization is that banks are letting delinquent borrowers stay longer in their homes rather than adding to the glut of foreclosed properties on the market. New consumer protection laws have also meant delinquent borrowers can spend more time in their homes.
A new wave of foreclosures could come in the second half of the year, especially if the unemployment rate remains high, mortgage-assistance programs fail, and the economy doesn't improve fast enough to lift home sales.
"It's not anything like a recov-ery yet," said Rick Sharga, a senior vice president at RealtyTrac Inc., a California foreclosure listing service.
RealtyTrac reported last week that nearly 323,000 households, or one in every 400 homes, received a foreclosure-related notice in May. That was up 0.5 percent from a year earlier, but down 3 percent from April. The report tracks notices for defaults, scheduled home auctions, and home repossessions.
But in a sign that the crisis is far from over, the number of homeowners who lost their homes to foreclosure hit a record of nearly 94,000 in May. That number may finally peak next year, as lenders try to work their way through millions of delinquent loans.
Thomas Lawler, an independent housing economist in Virginia, said, "You are highly likely to see an acceleration in the number of actual completed foreclosures."
Lenders are offering to help some homeowners modify their loans. But many borrowers can't qualify or they are falling back into default. The Obama Administration's $75 billion foreclosure prevention effort has made only a small dent.