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August defaults up 33%, Foreclosure wave rising

September 16th, 2011 Comments off

bank_foreclosures_sign_wikimedia_commonsYahoo!Finance reports a new wave of foreclosure is expected, as the number of  U.S. homes that received an initial default notice – the first step in the foreclosure process – jumped 33 percent in August from July, per RealtyTrac. “This is really the first time we’ve seen a significant increase in the number of new foreclosure actions,” said Rick Sharga, a senior vice president at RealtyTrac. “It’s still possible this is a blip, but I think it’s much more likely we’re seeing the beginning of a trend here.” Foreclosure activity slowed last fall after problems surfaced with the handling of foreclosure paperwork, collectively known as robo-signing. Foreclosures weigh down home values and create uncertainty among potential homebuyers’ that prices may decline as more foreclosures hit the market. There are about 3.7 million more homes in some stage of foreclosure now than there would be in a normal housing market, according to Citi analyst Josh Levin. “This bloated foreclosure pipeline now presents the greatest obstacle to a housing market recovery,” Levin said. Banks are on track to repossess some 800,000 homes this year, down from more than 1 million last year, Sharga said. Nevada leads the nation, with one in every 118 households receiving a foreclosure-related notice last month.  Rounding out the top 10 states with the highest foreclosure rate in August are California, Arizona, Georgia, Idaho, Michigan, Florida, Illinois, Colorado and Utah.

(Filephoto credit: Wikimedia Commons)