Foreclosures surge on mortgage woes
Filings were up 35 percent in the first quarter; Detroit and Las Vegas get hammered.
CNN | May 04, 2007
NEW YORK -- Foreclosure filings surged during the first quarter of 2007, as home price increases slowed or even reversed and borrowers fell behind on payments once their adjustable rates began resetting at much higher levels.
The number of filings climbed 27 percent in the first quarter compared with the fourth quarter of 2006 and 35 percent from a year earlier, according to a report released Wednesday by RealtyTrac, an online marketer of foreclosure properties.
There were more than 430,000 foreclosure filings nationwide, one for every 264 households. The filings include everything from default notices to auction sale notices to actual bank repossessions.
Nevada had the highest foreclosure rate - there was one for every 75 households. The Las Vegas area had undergone a boom in speculative real estate investing during the red-hot housing market years of 2004 and 2005 and, as prices have dropped, the speculators are taking bad beatings.
Colorado recorded the second-highest foreclosure rate with one filing for every 111 households.
The state has long been among the leading foreclosure locales, a situation that some attribute to a Wild West, mostly unregulated mortgage broker industry before a new law went into effect last year requiring brokers to register with the state. Many homeowners there had been saddled with unaffordable loans in recent years.
Numerically, California had more filings than any other state at 80,595. That accounted for nearly one of every five foreclosures in the nation and was more than double the number from a year ago.
Florida filings also climbed precipitously to 45,156, up 52 percent for the quarter and 55 percent over last year.
Among metro areas, Detroit got hammered the most. It recorded 16,351 foreclosures during the quarter, one for every 51 households, five times the national average. Vegas was a close second with one per 57 households.
Three central California cities were also hit hard. Riverside/ San Bernardino, Sacramento and Stockton took third, fourth and fifth place.
Foreclosures are expected to continue to increase all year as many of the numerous adjustable-rate mortgages written during 2004 and 2005 hit the dates of their first resets, when their interest rates can increase by three percentage points or more.
The resets may turn barely affordable loans into totally unaffordable ones for borrowers, forcing them to go into default.
Many homeowners -- some consumer advocates claim as many as 2.4 million - are in danger of losing their homes over the next couple of years.
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