US foreclosures double on falling prices
US foreclosure filings more than doubled in the second quarter from a year earlier as falling home prices left borrowers owing more on mortgages than their properties were worth.
By Bloomberg |
NEW YORK: US foreclosure filings more than doubled in the second quarter from a year earlier as falling home prices left borrowers owing more on mortgages than their properties were worth. One in every 171 households was foreclosed on, received a default notice or was warned of a pending auction. That was an increase of 121 per cent from a year earlier and 14 per cent from the first quarter, RealtyTrac said on Friday in a statement. Almost 740,000 properties were in some stage of foreclosure, the most since the Irvine, California-based data company began reporting in January 2005.
���Rising foreclosures are putting downward pressure on prices, increasing the possibility that homeowners will go upside-down on their mortgages,��� said Sheryl King, chief US economist at Merrill Lynch & Co in New York. ���That will cause more losses in mortgage portfolios and less willingness from investors to securitise mortgages and therefore, fewer mortgages.���
About 25 million US homeowners risk owing more than the value of their homes, according to Bill Gross, manager of the world���s biggest bond fund at Pacific Investment Management. That would make it impossible for them to negotiate better loan terms or sell their property without contributing cash to the transaction.
Falling home values, led by states such as Nevada and California that have the biggest default rate, have prompted RealtyTrac to almost double the projected number of foreclosures this year to nearly 2.5 million, said Rick Sharga, executive vice-president for marketing. ���The big variable here is what effect the housing bill now being considered by the Senate is going to have on foreclosure activity in general,��� Sharga said in an interview. ���Based on market conditions themselves, we are nowhere near the end of this trip. Best-case scenario, we���re looking at another year of this.���
The housing bill aims to help 400,000 Americans with subprime home loans refinance into 30-year, fixed-rate mortgages backed by the government. The measure passed the House of Representatives and President George W Bush has said he would sign it. Subprime mortgages were available to borrowers with bad or incomplete credit histories and default at five times the rate of prime mortgages, according to the Mortgage Bankers Association in Washington.
Bank seizures in the first half of the year increased by 154 per cent to 370,179 from the same period in 2007,
���Rising foreclosures are putting downward pressure on prices, increasing the possibility that homeowners will go upside-down on their mortgages,��� said Sheryl King, chief US economist at Merrill Lynch & Co in New York. ���That will cause more losses in mortgage portfolios and less willingness from investors to securitise mortgages and therefore, fewer mortgages.���
About 25 million US homeowners risk owing more than the value of their homes, according to Bill Gross, manager of the world���s biggest bond fund at Pacific Investment Management. That would make it impossible for them to negotiate better loan terms or sell their property without contributing cash to the transaction.
Falling home values, led by states such as Nevada and California that have the biggest default rate, have prompted RealtyTrac to almost double the projected number of foreclosures this year to nearly 2.5 million, said Rick Sharga, executive vice-president for marketing. ���The big variable here is what effect the housing bill now being considered by the Senate is going to have on foreclosure activity in general,��� Sharga said in an interview. ���Based on market conditions themselves, we are nowhere near the end of this trip. Best-case scenario, we���re looking at another year of this.���
The housing bill aims to help 400,000 Americans with subprime home loans refinance into 30-year, fixed-rate mortgages backed by the government. The measure passed the House of Representatives and President George W Bush has said he would sign it. Subprime mortgages were available to borrowers with bad or incomplete credit histories and default at five times the rate of prime mortgages, according to the Mortgage Bankers Association in Washington.
Bank seizures in the first half of the year increased by 154 per cent to 370,179 from the same period in 2007,
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RealtyTrac said. Last year���s second-quarter data on bank repossessions was not available, according to RealtyTrac. Forty eight of 50 states and 95 of the 100 largest US metropolitan areas had year over year increases in foreclosure filings in the second quarter, RealtyTrac said. Download
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