Foreclosure activity among US properties rose to the highest level on record in the third quarter, as bold government stimulus measures failed to keep homeowners from defaulting.
Default notices, auction sales and bank repossessions jumped by five per cent from the second quarter to the third quarter and were up by 23 per cent year-on-year, according to RealtyTrac. That was the highest quarterly increase since the foreclosure tracking company started keeping records in 2005.
In spite of the sharp quarterly increase, foreclosure filings eased in September for the second month running. However, the total of 937,840 filings was the third highest monthly number on record.
“Lenders may be starting to work through some of the pent-up foreclosure inventory caused by legislative delays, loan modification efforts and high volumes of distressed properties,” James Saccacio, RealtyTrac’s chief executive, said in a statement.
Nevada, Arizona and California had the highest rates of foreclosure in the third quarter. They were among six states which accounted for 62 per cent of all foreclosure filings in the US.
In Nevada, which was among the states hit hardest by the implosion housing bubble, one of every 23 houses received a foreclosure filing.
Record rates of foreclosure continue to be the biggest obstacle facing the housing recovery. Analysts argue that foreclosures are likely to top 2m during the next year, keeping prices low into 2010.
The US government, which has already offered hefty incentives to lenders to encourage modifications of mortgages in a $75bn effort to combat the foreclosure problem, is currently wrestling with the idea of extending the $8,000 first-time home buyer tax credit. But some economists argue that the foreclosure problem must be dealt with more directly.
“If the prevailing pressure on the housing market is the result of foreclosures on current owners, initiatives that are designed to spur demand are misdirected,” chief economist at Real Estate Econometrics. “Given the need for careful management of the public purse, available resources should be directed squarely at the challenge of foreclosures.”