More homeowners drowning in unmanageable mortgages are letting lenders take their homes. The crisis is expected to peak in a couple of months.
The onslaught of homes facing foreclosures has yet to ebb, a research report showed today, with bank repossessions skyrocketing last month as more troubled homeowners mailed in their keys and walked away.
And the worst isn’t over: the wave of adjustable-rate loans resetting to higher rates will crest in May and June. And that’s expected to push more homeowners into default and foreclosure in the third and fourth quarters of this year, according to RealtyTrac, of Irvine, Calif.
“Once we’re through that batch of loans, the worst will have been worked through the system,” said Rick Sharga, RealtyTrac’s vice president of marketing.
The number of U.S. homes receiving at least one foreclosure filing jumped 57 percent in March to 234,685, compared with 149,150 properties a year earlier. Filings include default notices, auction sale notices and bank repossessions.
- Seattle City Council kills sale of street for Sodo arena; Sonics fans despair
- This drone footage of inside Bertha’s tunnel is like something out of ‘Star Wars’
- Ted Cruz ends his bid for Republican presidential nomination
- Man killed by car pulling out of Seattle parking garage
- Bertha under the viaduct: Drilling that shut highway is nearly 30 percent done
Most Read Stories
Washington state ranked 16th in the nation for foreclosures, with 1,608 filings in March — a 121 percent increase over March 2007 and a 73 percent increase over February. However, RealtyTrac cautioned that the actual increase may not “be as high due to data collection changes or improvements.”
Nationwide, the overall foreclosure rate is 5 percent higher than in February, which saw an unexpected month-to-month decline over January. March marked the 27th consecutive month of year-over-year increases in national foreclosure filings.
That meant one in every 538 households received a filing during the month. Forty-four percent were households that slipped into default for the first time, and more than a fifth were homes that banks took back.
In Washington, one in every 705 households entered foreclosure. No countywide numbers were available.
Lenders took possession of homes at a sharply higher rate, up 129 percent over last year, as more homeowners relinquished their homes, Sharga said. Banks repossessed 51,393 properties nationwide, many of them without a public foreclosure auction.
“In a lot of cases, banks worked something out with the owner in advance and took back the keys and deed,” Sharga said. “For a homeowner, it’s not as embarrassing and it’s a little less of a blemish on their credit record compared to a foreclosure.”
Sharga estimates that 750,000 to 1 million bank-owned properties will hit the market this year, or about a quarter of the homes up for sale. In some areas, these properties will continue to slow sales and further depress prices.
Declining home prices and stricter lending requirements have exacerbated the foreclosure environment. Homeowners stuck in unmanageable mortgages aren’t able to sell their homes or refinance into cheaper loans before their mortgage payments reset higher.
Nevada clocked in the worst foreclosure rate for the 15th straight month. Last month, one in every 139 households received a foreclosure-related notice, nearly four times the national rate. The number of properties with a filing increased 24 percent over February and 62 percent over the previous March.
California had the second-highest foreclosure rate. One in every 204 California households received a foreclosure-related notice. The state had 64,711 properties facing foreclosure, the most of any state and more than double last year’s total.
In Florida, 30,254 homes reported at least one filing, down nearly 7 percent from February, but up 112 percent from the year before.
Rounding out the states with the highest foreclosure rates were Arizona, Colorado, Georgia, Ohio, Michigan, Massachusetts and Maryland.
Seattle Times business reporter Elizabeth Rhodes is included in this report.