Foreclosures soar 81 percent in 2008

NEW YORK (Reuters) - U.S. foreclosure activity jumped 81 percent in 2008, with one in every 54 households getting at least one filing notice, suggesting various state laws and private programs to slow the process have been ineffective, RealtyTrac reported on Thursday.

Nearly 3.2 million foreclosure filings on 2.3 million properties were made last year, the Irvine, California-based research firm said. Filings include notice of default, auction sale or bank repossession.

“Clearly the foreclosure prevention programs implemented to date have not had any real success in slowing down this foreclosure tsunami,” James J. Saccacio, chief executive officer of RealtyTrac, said in the report.

Foreclosure activity did slow in the fourth quarter overall, declining 4 percent from the third quarter, but jumped nearly 40 percent from the fourth quarter of 2007.

And foreclosure activity last year was up 225 percent from 2006, the year home prices began a deep slump that prevented many homeowners from selling or refinancing.

Home prices have plunged more than 20 percent from the summer of 2006, according to Standard & Poor’s/Case-Shiller measures.

Filings leaped by 17 percent in December from November.

“State legislation that slowed down the onset of new foreclosure activity clearly had an effect on fourth-quarter numbers overall, but that effect appears to have worn off by December,” Saccacio said. “The recent California law, much like its predecessors in Massachusetts and Maryland, appears to have done little more than delay the inevitable foreclosure proceedings for thousands of homeowners.”

California required lenders to provide written notice of their intent to start foreclosure proceedings 30 days prior to issuing a notice of default.

Family belongings are put out on the curb by a worker after McLennan County Deputy Constables delivered a court order of eviction to a family in Waco, Texas, December 31, 2008. REUTERS/Larry Downing

Nevada, Florida, Arizona and California, respectively, posted the highest state foreclosure rates last year, RealtyTrac said.

These are states where home prices soared the most during the five-year housing boom earlier this decade.

Foreclosures also rose as interest rates jumped last year just as hundreds of billions of dollars of adjustable-rate mortgages reset, sending loan payments sharply higher.

And lenders that had seldom turned potential borrowers away clamped down, curbing access to new funds, as foreclosures shot to record highs.

RealtyTrac has said that foreclosure activity would spike without a broad permanent fix for troubled mortgages in what economists are calling a deep recession.

Some relief may come from January’s tumbling home loan rates, spurred by the promise of massive government purchases of mortgage bonds.

Average 30-year loan rates have fallen under 5 percent, the lowest in some four decades, by several measures. Requests to refinance have soared to the highest level in more than five years, according to the Mortgage Bankers Association, which could cut borrowing costs and help keep some borrowers in their homes.

Nevada had the highest rate of foreclosure, with more than 7 percent of Nevada housing units, or one in every 14, receiving at least one foreclosure notice in 2008. There were foreclosure filings on 77,693 properties, up nearly 126 percent from 2007, RealtyTrac said.

California had the highest number of foreclosure filings, at 523,624 properties, followed by Florida and Arizona.

Among the 100 largest metropolitan areas, Stockton, California, had the highest rate of foreclosure, at 9.46 percent. Las Vegas was close behind in second place.

Cities in California and Florida accounted for seven of the top 10 metro foreclosure rates, RealtyTrac said. Economically challenged Detroit was in 10th place, with one of every 22 housing units receiving a filing notice last year.

Editing by Leslie Adler