Home foreclosures rapidly increasing

LOS ANGELES (AP):

The number of United States (US) homes lost to foreclosure surged in July, another sign lenders are moving quicker to take back properties from homeowners behind in payments.

Lenders repossessed 92,858 properties last month, up nine per cent from June and an increase of six per cent from July 2009, said foreclosure listing firm RealtyTrac Incorporated.

Banks have stepped up repossessions this year to clear out the backlog of bad loans. July makes the eighth month in a row that the pace of homes lost to foreclosure has increased on an annual basis.

Meanwhile, homeowners who are falling behind on their payments are being allowed to stay in their homes longer because lenders are reluctant to add to the glut of foreclosed homes on the market.

The number of properties receiving an initial default notice - the first step in the foreclosure process - rose one per cent last month from June, but tumbled 28 per cent versus July last year, RealtyTrac said.

Initial defaults have fallen on an annual basis for the past six months.

Crisis

The latest data reflect a foreclosure crisis that continues to drag on as many homeowners struggle to make their monthly payments amid high unemployment, slow job growth and an uneven rebound in home prices.

Economic woes, such as unemployment or reduced income, are now the main catalysts for foreclosures. Initially, lax lending standards were the culprit, but homeowners with good credit who took out conven-tional, fixed-rate loans are now the fastest-growing group of foreclosures.

Lenders are offering a variety of programmes to help homeowners modify their loans, but their success rates vary. Hundreds of thousands of homeowners cannot qualify or fall back into default.

The Obama administration has rolled out numerous attempts to tackle the foreclosure crisis but has made only a small dent in the problem. More than 40 per cent, or about 530,000 homeowners, have fallen out of the administration's main effort to assist those facing foreclosure.

That programme, known as Making Home Affordable, has provided permanent help to about 390,000 homeowners, or 30 per cent of the 1.3 million who have enrolled since March 2009.

Still, RealtyTrac estimates more than one million American households are likely to lose their homes to foreclosure this year.

In all, 325,229 properties received a foreclosure-related warning in July, up four per cent from June, but down 10 per cent from the same month last year, RealtyTrac said. That translates to one in 397 US homes.

The firm tracks notices for defaults, scheduled home auctions and home repossessions - warnings that can lead up to a home even-tually being lost to foreclosure.

Among states, Nevada posted the highest foreclosure rate in July, with one in every 82 households receiving a foreclosure notice. The number of properties in Nevada receiving a foreclosure warning last month rose nearly seven per cent from June, but fell nearly 30 per cent from the same month last year.

Rounding out the top 10 states with the highest foreclosure rate last month were: Arizona, Florida, California, Idaho, Michigan, Utah, Illinois, Georgia and Maryland.

Las Vegas continued to be the city with the highest foreclosure rate in the US, with one in every 71 homes receiving a foreclosure notice in July - more than five times the national average.