By Moisés Reyes
Home Foreclosures Rise Sharply in First Quarter of 2010
The first three months of this year saw a record number of property foreclosures, the steepest hike in the past five years. According to RealtyTrac, home foreclosures jumped 35 percent during the year’s first quarter from one year ago, and homes facing foreclosure jumped 16 percent within the same period and 7 percent from the last quarter of 2009. This sharp rise in foreclosures is the highest in any quarter since the beginning of 2005, potentially giving rise to many more REO foreclosures and bank owned properties. In fact, one RealtyTrac senior vice president has said that we can expect to see more than 1 million repossessions and bank foreclosure properties this year.
Effect of U.S. Foreclosure Prevention Program
Thanks to the Obama administration’s $75 billion Home Affordable Refinance Program, foreclosures began going down as banks were pressured to modify home loans for borrowers facing financial hardship. This, along with the enacting of foreclosure moratoriums by some states, helped to ease the rate of government foreclosure homes, but now, that rate has surged once again. RealtyTrac reported that over 900,000 households have received a notice of foreclosure.
As part of the U.S. government’s Home Affordable Refinance Program, about 231,000 homeowners have completed loan modifications, which make up only a fraction, 21 percent, of the more than one million citizens who have begun using the program since last year. On the other hand, over 150,000 homeowners who signed up for the program dropped out as a result of failure to make payments or failure to provide necessary documentation. Only a month earlier, the number of program dropouts was 90,000. Last month, the administration expanded the foreclosure prevention program to reduce the amount of money some homeowners facing financial difficulties owe on their home loans and also to cut some unemployed homeowners some slack. Nevertheless, this expansion is not expected to completely work out for another few months.
According to RealtyTrac, the states with the highest rates of foreclosures in this year’s first quarter were Nevada, Arizona, Florida and California. Nevada had the highest rate, with one in every 33 homes being foreclosed upon, which is four times the national average.
