Bank repossessions of homes rose 44 percent in May over the same month last year, reaching an all-time high and with increases occurring in every state as lenders stepped up the rate of seizures. Realty Trac, Inc., an Irvine, CA-based data company that tracks foreclosures, reports that bank repossessions totaled 93,777 in May, with filings — including default and auction notices — soaring to 322,920. In other words, one out of every 400 households in the United States has now received a filing.
According to Rick Sharga, Realty Trac’s senior vice president for marketing, “We’re nowhere near out of the woods. We’re likely to set a record for home seizures if June is anything like May. The second quarter won’t be the peak. I’m not even sure 2010 will be.” April previously held the record for the most seizures – 92,432 of them. Sharga believes that an additional 5,000,000 delinquent mortgages will end in foreclosure.
Approximately 25 percent of American homeowners are under water – they owe more than their homes are worth – notes Zillow.com. Bank sales of foreclosed houses comprised more than 20 percent of all transactions in March. Some of the largest lenders – primarily Wells Fargo & Company and Bank of America – are giving homeowners who owe more than 120 percent of what their houses are worth a helping hand by cutting the principal. “Marginal people, those types who were working as laborers, are most affected by foreclosures,” said Albert Kyle, a finance professor at the University of Maryland’s R. M. Smith School of Business. “A lot of foreclosures are occurring in modest homes.”
Statistics from the United States Census Bureau indicate that household mobility is at a 20-year low. According to Sam Khater, a senior economist with the consulting firm of American CoreLogic, under water mortgages are the primary reason why people are less mobile.