Relentless Foreclosures Increase Alarmingly In Third Quarter

Posted on November 18, 2008
Filed Under Foreclosure Homes | Leave a Comment

Relentless foreclosures increased alarmingly by 71% in the third quarter in comparison to the previous year. September saw the repossessing of 81,312 houses by the banks. The foreclosure crisis continues to choke the nation. From August 2007 851,000 house have been taken over by the lenders according to RealtyTrac. 265,968 householders received foreclosure notices in September – this is inclusive of default and auction sale notices as well as bank repossessions. It is however a fall by 12% from August 2008 but 21% increases from August 2007.

In the third quarter of 2008 765,558 units were foreclosed upon. It was a spike of 3% from the second quarter and 71% jump from the previous year during the same quarter.

Rick Sharga of RealyTrac said, “We have never seen a foreclosure cycle like this one before.” Previously home repossessions were preceded by economic slump but “in this cycle, we have foreclosure problems that have caused an economic downturn.”

The recent downturn in foreclosure numbers is most probably due to the action taken by many states to change housing laws. James Saccacio of RealtyTrac said, “Much of the 12% decrease in September can be attributed to changes in state laws that have at least temporarily slowed down the pace at which lenders are moving forward with foreclosures.”

California has one of the worst foreclosure hit states. It has initiated a new law that stipulates banks to open communications with the troubled borrowers at least 30 prior to the issuing of the default notice. This has caused the foreclosure numbers to sharply drop. Saccacio added, “In September, we saw California (defaults) drop 51% from the previous month. That had a big impact on the national numbers since California accounts for a third of the nation’s foreclosure activity.”

A law along similar lines have been passed by North Carolina where the default numbers dropped by 66% in September. Unfortunately the economic situation is so grim that even this step will not really be able to help foreclosure victims – just postponing matters. Sharga commented that even if few house owners continue to stay in their homes because of the legislation the step has to be lauded. The longer one stays in foreclosure the more difficult it becomes to “get out of foreclosure”. Massachusetts is a good example of this. Foreclosures fell with the passing of the law but as soon as the law ceased to be effective the numbers rose astronomically.

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