Loan Modification in the News and Media

April 15 (Bloomberg) -- Foreclosure filings in the U.S. rose 16 percent in the first quarter from a year earlier and bank seizures hit a record as lenders stepped up action against delinquent homeowners, according to RealtyTrac Inc.

A total of 932,234 homes, or one out of every 138 households, received a default or auction notice, or were repossessed by banks, the Irvine, California-based firm said today. In March, filings rose 8 percent to the most in any month since RealtyTrac began publishing reports in January 2005.

“The banks are finally working through it,” Rick Sharga, RealtyTrac’s executive vice president for marketing, said in a telephone interview. “We’re seeing a resolution for properties that were in foreclosure but where seizure was delayed.”

Unemployed and “underwater” homeowners, or those who owe more than their property is worth, are driving foreclosures. The U.S. jobless rate was 9.7 percent in March, unchanged for a third month, the Labor Department reported April 2. More than a fifth of mortgaged homes were underwater in the fourth quarter, according to real estate data firm Zillow.com.

Bank repossessions climbed to 257,944 in the quarter. Scheduled auctions totaled 369,491, also the most since RealtyTrac began releasing data.

RealtyTrac is forecasting more than 1 million bank seizures this year and at least 4 million foreclosure filings, both potential records. Foreclosures won’t level off until next year, Sharga said.

Foreclosure prevention efforts such as the U.S. Treasury’s Making Home Affordable Program may have “slowed down the normal foreclosure timeline,” James J. Saccacio, RealtyTrac’s chief executive officer, said in today’s report.

The number of homes seized by lenders rose 35 percent from a year earlier, RealtyTrac said. Auctions increased 21 percent from the same period in 2009.

RealtyTrac reported 304,799 default notices in the quarter, down 1 percent from a year earlier. The number peaked at more than 342,000 in the third quarter of 2009.

Nevada had the highest foreclosure filing rate for the 14th straight quarter. One in every 33 households got a notice, more than four times the national average. A total of 34,557 Nevada homes got filings, down 16 percent from a year earlier, RealtyTrac said.

Arizona had the second-highest rate at one in 49 households, three times the national average. Florida ranked third with one in 57 households and California was fourth at one in 62.

Utah ranked fifth, with one in 88 households, and had the biggest annual increase -- 75 percent -- among states with 10 the highest rates.

The following is a list of the 10 states with the most foreclosure filings in the first quarter.

Foreclosure activity up sharply despite loan modification program

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The number of U.S. households caught in the foreclosure process during the first quarter jumped 7% from the prior quarter as activity increased sharply in March, a real estate firm will report Thursday.

Filings involving the later stages of foreclosure rose compared with the same period last year, according to RealtyTrac of Irvine, indicating that banks were beginning to repossess properties at a faster clip despite the Obama administration's push to help borrowers.

"Lenders are starting to make a dent in the backlog of distressed inventory," RealtyTrac Chief Executive James J. Saccacio said.

The government's effort to help borrowers has improved, with 227,922 homeowners receiving permanently reduced monthly payments through March, a 35% increase from February's tally, the Treasury Department said Wednesday. Additionally, more than 108,000 permanent modifications had been approved by lenders, the report said.

But a congressional panel evaluating the administration's $75-billion program said that "Treasury's response continues to lag well behind the pace of the crisis."

Helping 3 million to 4 million homeowners avoid foreclosure through 2012 is the target of the Obama administration program. Last month, the administration unveiled heightened measures aimed at getting lenders to reduce principal balances on problem mortgages and to refinance borrowers who owe more than their homes are worth.

But critics want lawmakers to make modifications mandatory and allow bankruptcy judges to modify mortgages that otherwise would end up in foreclosure.

"Progress is being made, but it is so incremental," said Kathleen Day, a spokeswoman for the Center for Responsible Lending. "We need a game-changer."

Foreclosure filings were reported on 932,234 properties during the first quarter, a 16% increase from the first quarter of 2009, RealtyTrac said. In March, 367,056 properties got foreclosure filings, up nearly 19% from February and nearly 8% from March 2009. It was the highest monthly total since RealtyTrac began reporting the numbers in January 2005.

California accounted for 23% of the nation's first-quarter foreclosure activity, with 216,263 properties receiving notices.

alejandro.lazo

@latimes.com

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Foreclosure activity up sharply despite loan modification program