U.S. Foreclosures Double as Refinancing Gets TougherBloomberg
By Bob Ivry
April 16, 2007
April 16 (Bloomberg) -- The number of U.S. homes entering foreclosure in the first quarter doubled from a year earlier as property prices stagnated and owners struggled to refinance mortgages.
Owners of 168,829 homes in the first three months of 2007 received notice that lenders had filed for foreclosure due to failure to pay loans or liens, Foreclosures.com said today in a statement. That compares with 83,154 homes in the same period of 2006, the Sacramento, California-based research firm said.
A four-year high in mortgage payment delinquencies and the failure or sale of 50 subprime mortgage companies, which provide loans to people with poor or limited credit histories, have made credit less available. The inability of homeowners to refinance their debt has added to the rise in foreclosures.
``A lot of folks have been borrowing and borrowing and borrowing to stay out of trouble,'' Foreclosures.com President Alexis McGee said in an interview. ``Now that there are less borrowers in the marketplace, where are they going to go? Unless lenders step up and offer money to these people, they'll be locked out.''
Riverside County, California, had a 172 percent rise in the number of homes entering the foreclosure process in the first quarter, the biggest increase of any county in the U.S., the company said.
Las Vegas Foreclosures
Foreclosures.com said other counties showing big increases were Clark County, Nevada, which includes Las Vegas (143 percent); Los Angeles County, California, (92 percent); Miami- Dade, Florida (90 percent) and Cook County, Illinois, where Chicago is located (44 percent).
The findings come as the National Association of Home Builders/Wells Fargo index of U.S. homebuilders' confidence fell to the lowest level of the year in April. The index dropped to 33 from 36 in March, the Washington-based association said today. A reading below 50 means most respondents view conditions as poor.
The National Association of Realtors said last week the median price of a home will fall 0.7 percent this year to $220,300. Mark Zandi, chief economist for Moody's Economy.com in West Chester, Pennsylvania, also said last week that the median price will slide to $210,000 in 2008, the lowest level since March 2004.
Slowing home sales in the first quarter contributed to California's highest number of missed mortgage payments since the second quarter of 1997, according to DataQuick Information Systems, a La Jolla, California-based research company.
Lenders sent 46,760 default notices to California homeowners in the first three months of 2007, an increase of 148 percent from the same period last year, DataQuick said.
California home prices rose by double-digit percentages from December 2001 to March 2006 and have been going up by single digits since April last year, DataQuick said. Borrowers who took out mortgages at low introductory rates, expecting home prices to rise, now face more expensive payments as rates have increased.
Most homeowners who enter the foreclosure process do not lose their houses. In many states, the process can be initiated by the lender when a borrower falls just one day behind, McGee said.
To contact the reporter on this story: Bob Ivry in New York at email@example.com .