US repossession rate doubles as credit crunch bites

The number of US homes heading towards repossession more than doubled in the first quarter from a year earlier, as weakening property values and tighter lending left many owners powerless to prevent them from being auctioned to the highest bidder, a research firm said today.

The number of US homes heading towards repossession more than doubled in the first quarter from a year earlier, as weakening property values and tighter lending left many owners powerless to prevent them from being auctioned to the highest bidder, a research firm said today.

Among the hardest hit states were Nevada, Florida and, in particular, California, where Stockton led the nation with a foreclosure rate that was 6.6 times the national average, RealtyTrac said.

Nationwide, 649,917 homes received at least one foreclosure-related filing in the first three months of the year, up 112% from 306,722 during the same period last year, RealtyTrac, based in Irvine, California, said.

The latest tally also represents an increase of 23% from the fourth quarter of last year.

RealtyTrac monitors default notices, auction sale notices and bank repossessions.

All told, one in every 194 households received a foreclosure filing during the quarter. Foreclosure filings increased in all but four states.

The most recent quarter marked the seventh consecutive quarter of rising foreclosure activity, RealtyTrac noted.

“What would normally alleviate the foreclosure situation in a normal market is people starting to buy properties again,” said Rick Sharga, RealtyTrac’s vice president of marketing.

However, the unavailability of loans for people without perfect credit and a significant downpayment is slowing the process, he says.

“It’s a cycle that’s going to be difficult to break, and we’re certainly not at the breaking point just yet,” Mr Sharga added.

The surge in foreclosure filings also suggests that much-touted campaigns by politicians and the mortgage lending industry aimed at helping at-risk homeowners are not paying off.

Hope Now, a Bush administration-organised mortgage industry group, said nearly 503,000 homeowners had received mortgage aid in the first quarter. Most of the aid was temporary, however.

Nearly 157,000 properties were repossessed by lenders nationwide during the quarter, according to RealtyTrac.

Nevada posted the worst foreclosure rate in the nation, with one in every 54 households receiving a foreclosure-related notice, nearly four times the national rate.

The number of properties with a filing increased 137% over the same quarter last year but only rose 3% from the fourth quarter.

California had the most properties facing foreclosure at 169,831, an increase of 213% from a year earlier. It also posted the second-highest foreclosure rate in the country, with one in every 78 households receiving a foreclosure-related notice.

Many of the areas – including Stockton, Riverside-San Bernardino, Fresno, Sacramento and Bakersfield – are located in inland areas of the state where many first-time buyers overextend themselves financially to buy properties that have plunged in value since the market peak.

Arizona had the third-highest foreclosure rate, with one in every 95 households reporting a foreclosure filing in the quarter. A total of 27,404 homes reported at least one filing, up nearly 245% from a year ago and up 45% from the last quarter of 2007.

Florida had 87,893 homes reporting at least one foreclosure filing, a 178% jump from the first quarter of last year and a 17% hike from the fourth quarter last year. That translates into a foreclosure rate of one in every 97 households.

The other states among the top 10 with the highest foreclosure rates were Colorado, Georgia, Michigan, Ohio, Massachusetts and Connecticut.

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