There are new signs the housing catastrophe may be getting worse than expected.
RealtyTrac, which keeps tabs on foreclosures, says high unemployment helped drive a record number of foreclosure filings on nearly three million properties, which received a total of 3,825,637 default notices, scheduled auctions and bank repossessions.
That’s despite another monthly decline in foreclosure activity in December due to delays caused by banks having to rework their mortgage foreclosure processes.
Filings rise
Total filings for the year were up nearly two percent from the 2009 record. Auctions rose 2.1 percent in 2010, while default notices plunged 20.1 percent. Bank repossessions made up for that decline -- increasing 14.4 percent. In all, just over one million homes were seized last year, 1.6 million properties went to auction and nearly 1.2 million default notices were sent.
According to RealtyTrac, some of the previously hardest hit states -- Nevada, California, Florida and Arizona -- saw fewer foreclosure filings in 2010 than in 2009. States including North Carolina, Hawaii, South Carolina and Washington saw an increase.
Nevada leads the way
Even with a decline in filings, Nevada is going through one of the worst housing situations in all 50 states. One in every ten Nevada homes has received a foreclosure filing.
In Arizona and Florida, it’s one home in 20. A small number of states continue to be the hardest hit. California, Florida, Arizona, Illinois and Michigan account for half of the nation's total filings.
The crystal ball
The question now is will foreclosure filings continue to rise in 2011? A lot of that answer depends on unemployment. Many analysts believe housing can’t recover in markets where unemployment is above 10 percent even with interest rates at near record lows.
If large numbers of jobless homeowners facing foreclosure find work this year, then that could push down filings. On the other hand, if unemployment remains high, then 2011 could set another record as banks increase their foreclosure filings in coming months to make up for the delays in 2010.
There are still a number of procedural problems that need to be worked out from last year’s robo-signing scandal. Once the banks sort that out, the number of filings could increase again. Another factor is home prices. If they continue to decline more homeowners could decide to just walk away from underwater mortgages. S&P forecast that home prices could drop another seven percent to 10 percent this year.
Tax credits, offered early in the year, helped boost some buying activity, but those benefits expired last April. In the eyes of many, the Home Affordable Modification Program (HAMP) -- meant to refinance mortgages to keep people in their homes -- was simply a failure.
