Around the country, foreclosure filings are on the rise again. Most agree it’s primarily due to an uptick in bank foreclosures, which are climbing again. Despite that, banks are nowhere the high from May 2012, when they were serving foreclosure notices on a weekly basis.
In at least 33 states, according to RealtyTrac, banks were once again focusing at least part of their attention on moving foreclosures forward. Some states saw bigger increases than others. Michigan is up by 19 percent, Illinois is up 44 percent and North Carolina saw a whopping 60 percent increase in foreclosures from April to May. Even states that make it difficult for banks to process saw increases. Judicial states, those that require a court order, saw a 13 percent increase. Meanwhile, in non -judicial states, the foreclosures were up by just 9 percent.
Foreclosure Filings and Signs
Is this a sign of times to come? Maybe, but it could be little more than balancing out and smoothing out the edges since so many banks rescinded much of their ongoing activity during these foreclosure problems and subsequent court proceedings. Another reason some experts are citing is more aggressive efforts of preventing foreclosures in the first place. Daren Blomquist, vice president at RealtyTrac, agrees,
Foreclosure activity continued to bounce back in some markets…by an aggressive combination of foreclosure prevention efforts over the past two years.
By the numbers, we can get a better idea of what exactly is going on:
- 148,054 – the number of new foreclosures in May
- 2 percent – the increase from April to May
- 6 year low – April’s promising foreclosure low
Some states saw even bigger foreclosure numbers. In Maryland, its increase is indicative of a 33 month high, still, Blomquist believes “the emerging housing recovery has strengthened most local markets enough to quickly shake off a few more blows from these nagging foreclosures.”
But it’s Florida that has the highest foreclosure rate. For some time now, it’s ranked second on the list, behind Nevada. One in every 302 Florida homes had a foreclosure filing during the month. That’s almost three times the national average, too. Florida foreclosure starts ballooned 39 percent from a two a year low in April and was still down 17 percent from a year ago. What’s known as “scheduled foreclosure auctions” in Florida increased 6 percent from the previous month and was up 79 percent from twelve months ago.
Meanwhile, as Nevada relinquished its top spot, it now claims the number 2 spot, followed by Ohio, Maryland and South Carolina. In that state, one in every 305 Nevada housing units had a foreclosure filing during the month.
If those are the top five states, what banks are making the most noise? If you’re thinking it’s the same five lenders involved in the massive mortgage settlement – Ally, Bank of America, Citi, Chase and Wells Fargo – you’re right. The only one of those banks that didn’t post an increase in foreclosure filings was Citi. Clearly, those temporary halts that the banks took to the airwaves, with martyr-like penance, lasted every bit of two seconds.
Remember those dreaded words, “negative equity epidemic”? It’s finally beginning to ease some, but there remain entirely too many Americans who are considered underwater in their mortgages. It’s defined as having a bigger amount due than the market value of their house.
CoreLogic says close to 850,000 houses are now back into the positive territory; however, there are still close to 10 million, or 19.8 percent of all properties that are residential still in negative equity at the end of March 2013. The total value comes to around $580 billion. That’s a lot of houses, but it’s down by 21.7 percent from one year ago. Taking it a step further, 11.2 million residential properties have less than 20 percent equity and these are the consumers who are struggling to refinance or take on new debt, even credit card debt.
Dr Mark Fleming, the chief economist for CoreLogic explains,
The impressive home price gains of 2012 and the beginning of 2013 have had a big impact on the distribution of residential home equity…During the past year, 1.7 million borrowers have regained positive equity.
Other findings from Dr. Fleming’s update include the top five states for foreclosure (Florida, Nevada, Michigan, Arizona and Georgia) account for nearly 33 percent of all negative equity in the U.S. From the perspective of metropolitan areas, Tampa, St. Petersburg and Clearwater Florida all had the highest percentage of mortgaged properties in the nation that are also tagged with negative equity. Up next are cities in South Florida, including Miami and Kendall. Coming in third is Atlanta.
HELOCs and Liens
Of the total $580 billion in negative equity, it’s the first liens without home equity loans that make up one half of negative equity while first liens that also have home equity loans, or HELOC, make up the other half. There are 6.0 million upside down borrowers who hold first liens without home equity loans and the average mortgage balance for this group of borrowers is $211,000. The average underwater amount is $48,000.
Meanwhile, there are also 3.7 million upside down borrowers who hold both first and second liens and the average mortgage balance for these homeowners is $294,000 with an average underwater amount of $79,000.
HUD reminds homeowners there’s help available and cite the Obama Administration’s new implemented programs designed to assist homeowners who are at risk of foreclosure. Even if they’re not at that danger zone, but who are otherwise struggling with their monthly mortgage payments, there are ways to find their way back. Most are administered through the U.S. Treasury Department and HUD.
Distressed homeowners are encouraged by HUD to first contact their lenders and loan servicers directly to see what, if anything, can be done. There may be foreclosure prevention options that are available. If they’re having problems communicating with their lenders, they’re encouraged to visit the HUD website for other alternatives and ways out. HUD has an extensive list of organizations that can step in and serve as a third party who can navigate the choppy foreclosure waters.