By Dan Levy
May 14 (Bloomberg) -- U.S. foreclosure filings climbed 65 percent and bank seizures more than doubled in April from a year earlier as mortgage industry efforts to modify loans fell short.
More than 243,300 properties were in some stage of foreclosure, the highest monthly total since RealtyTrac Inc., a seller of default data, began in January 2005. One in every 519 households received a filing and Nevada, California and Florida had the highest rates. Filings rose 4 percent from March.
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The worst housing slump since the Great Depression may push the U.S. economy into a recession. Falling home prices, which dropped the most in 29 years in the first quarter, are making it tougher for homeowners to refinance, and voluntary programs to change loan terms for at-risk borrowers haven't helped enough people, said Ira Rheingold, executive director of the National Association of Consumer Advocates in Washington.
``Loan modification isn't working,'' Rheingold said. ``It's extremely difficult for a homeowner to talk to a servicer and even if they do, it's hard to get the servicer to change the terms. You get voice-mail hell, they don't return calls, you can't get a live person on the phone.''
Foreclosures are mounting even as the Bush administration and Congress propose relief for homeowners. The Democrat-led U.S. House of Representatives approved a $300 billion plan May 8 that would allow the government to insure refinanced mortgages. Acting Housing and Urban Development Secretary Roy Bernardi said the next day he was willing to compromise on the proposal after Republican President George W. Bush threatened to veto it.
No Hope Now
Hope Now, an industry effort backed by Treasury Secretary Henry Paulson, has resulted in modified loan terms for 500,000 homeowners in the first quarter and 1.38 million since July 2007, the organization said in an April 28 statement.
Bank repossessions jumped 145 percent in April from a year earlier to 54,574, according to Irvine, California-based RealtyTrac. The company has database of more than 1.5 million properties and monitors foreclosure filings including defaults notices, auction sale notices and bank seizures.
Banks will seize about 60,000 properties a month through December, when about 1 million U.S. homes, or a quarter of all homes for sale, may be bank-owned, Rick Sharga, RealtyTrac's executive vice president of marketing, said in an interview.
Bloated Inventory
``These are the properties that are causing the bloat in the inventory,'' he said.
Delinquencies on subprime mortgages will continue to rise and defaults on prime loans also may accelerate as people lose their jobs in a slowing economy, Fabbri said. About $460 billion of adjustable-rate loans were scheduled to reset this year, according to New York-based analysts at Citigroup Inc.
The foreclosure process typically begins when a borrower is more than 90 days late on mortgage payments and the lender files a notice of default. If the borrower doesn't pay what's owed, the property goes to auction. If bids don't reach a set amount, the lender takes ownership of the house.
Nevada had the highest U.S. foreclosure rate for the 16th consecutive month. One of every 146 households was in some stage of foreclosure, 3.6 times the national rate, RealtyTrac said. Filings almost doubled from a year earlier to 7,276.
California had the second-highest rate, one for every 204 households, and the most filings for the 16th consecutive month at 64,683. Filings more than doubled from a year earlier and were down less than 1 percent from March.
Arizona had the third-highest rate, one for every 224 households. Filings almost tripled from a year earlier to 11,620.
Florida Filings
Florida had the second most filings at 35,264 and the fourth-highest rate, one for every 242 households. Foreclosures increased 146 percent from a year earlier and rose almost 17 percent from March.
Ohio ranked third in filings at 11,680. Arizona, Texas, Michigan, Georgia, Illinois, Nevada and Maryland also ranked in top 10 states with the most filings, RealtyTrac said.
Foreclosure filings in New York were up 39 percent from a year ago and up 12 percent from March. The state ranked 29th with 5,696 filings.
In New Jersey, foreclosure filings ranked 15th at 5,143, up 65 percent from a year ago and up 15 percent from March. Connecticut foreclosures ranked 19th at 1,707, down 59 percent from a year ago and down 20 percent from March.
Properties in foreclosure ``contribute to already bloated inventories of homes for sale, and put downward pressure on home values,'' RealtyTrac Chief Executive Officer James Saccacio said today in a statement.
The median price for a single-family home fell 7.7 percent in the first quarter, the National Association of Realtors reported yesterday. There were 4.06 million U.S. homes for sale at the end of March, 40,000 more than the prior month, the Realtors association said in an April 22 report.
``Inventory levels have soared to unprecedented levels'' Brian Fabbri, chief North American economist for BNP Paribas, said in an interview. ``Builders and homeowners have to lower their prices significantly to sell that inventory out.''
To contact the reporter on this story: Dan Levy in San Francisco at dlevy13@bloomberg.net
Last Updated: May 14, 2008 11:43 EDT