Its another record in the real estate market, and its not a good one. RealtyTrac, the online foreclosure sale site, which has also been tracking foreclosure activity since the beginning of 2005, reports the single largest one-month volume of foreclosure activity its ever seen.
Again, theyve only been doing this for three years, but you get the idea.
Foreclosure activity in April--thats default notices, auction sale notices and bank repossessions (so yes there can be more than one hit on the property, but we look at the total percentage increases)--was reported on 243,353 properties. Thats a 65% increase from April of 2007.
Alright, so what about all the reports that borrowers are being helped, and all those programs to find and refi borrowers, and what about the word from some other sources that foreclosure numbers are actually dipping?
Well heres a disconcerting answer: Apparently the system, that is whatever court or clerk or local bureaucratic office is stuck with recording all this stuff, is stressed. In Ohio, for example, Im being told that it can take two to six months to get your filings in the system.
"In states like Michigan, were hearing from some of the trustees who actually do the foreclosures that the lenders have asked them to slow down because they dont want to process any more into a market that wont absorb the properties back through sales," says Rick Sharga of RealtyTrac.
In Florida, a St. Lucie County court actually added a night shift to handle the massive backlog of foreclosure filings. The clerk of the courts was quoted as saying the caseload has become, "just horrendous." The court used to handle about forty filings per month.
In January they were tracking 715 foreclosure filings. Some are reporting lower numbers because the numbers simply cant get into the system.
The folks at RealtyTrac, and granted these folks list foreclosed properties for a fee, say they dont believe well see the numbers start to slow until the second quarter of 2009. May and June of this year, according to banking estimates, are supposed to be the peak of adjustable rate mortgage resets from subprime loans initiated in 2006.
Lower interest rates on Libor (one of the most common of benchmark interest rate indexes used to make adjustments to adjustable rate mortgages) and other indices that correlate to ARM loans could help, as could continued efforts from FHA and lenders. But the sheer volume, it appears will remain high for now.
All those foreclosed homes on the market will continue to push inventories up and push prices down in neighborhoods across the country.
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