Foreclosures Continue to Wreck Havock on Market

Posted on May 1st, 2008 by saman

Last month home foreclosures have increased by fifty seven percent. RealtyTrac reported that across the nation, there haver been over two hundred thousand homes that went into foreclosure. In states such as Nevada, one in one hundred and thirty nine households went into foreclosure. California had over sixty thousand foreclosures.

This increase in foreclosures are part of the continued housing downturn. The housing crisis has been driven by adjustable and subprime loans. The problems stem from the problem of affordability. People were buying properties that they could not afford through bad lending practices. Housing watchers have been saying that without the assistance of the federal government, foreclosures will not peak until the last quarters of 2008. There will most likely be a lot of homes owned by the bank this year and this will increase their inventories of houses. Until these houses are off the banks books, the market will not get back to normal. Repossessions have increased by one hundred and twenty nine percent since 2007 and auctions of foreclosured homes have increased thirty two percent. Homeowners in default are just walking away from homes they can no longer afford and giving them back to the bank. They are choosing to do this instead of wasting money and time on the foreclosure process. Different circumstances in different states have been driving the increase in foreclosure filings. In the state of California, the problem has been aggravated by homes that were overvalued and unreasonable mortgages.The same can be said of the states of Nevada and Florida. Bad bets on the prices of housing and speculative buying helped worsen the real estate market. The state of Ohio saw over eleven thousand foreclosure filings and the state of Michigan saw over nine thousand foreclosures. In distressed states such as Ohio where so many homes are being foreclosed on, some people are resorting to pay day loan services. This industry is thriving in the state. Incredibly, pay day loan centers now outnumber the fast food places in the state. Homeowners are going to these centers thinking that they will help them get over their financial crisis but this is actually the worst thing that they could do. In fact, getting loans from these types of places may bring on foreclosure faster. High unemployment in the state is the cause of foreclosures in Michigan and Ohio.In the states of Colorado and Georgia, there has been too much construction of houses along with mortgage fraud. There have been individuals in foreclosure scam rings that overvalued properties, had false appraisals done and have pushed through bad loans. Even though the state of Colorado is one of the ten states that have the highest foreclosure rates in the United States, things may be getting better for the home of the Rocky Mountains. Last month, the number of foreclosures in the state are one percent lower than last year and about eight percent lower than in the month of February. RealtyTrac credits this drop to the homeowner aid programs.