U.S. Home Seizures Reach Record as Recovery Delayed

U.S. home foreclosures climbed to a record in April, a sign that government mortgage relief efforts have yet to turn the tide of property seizures, according to a report by RealtyTrac Inc.

“Right now it appears that the banks are focusing on processing the loans already in foreclosure, and slowing down the initiation of new foreclosure proceedings as a way of managing inventory levels,” Rick Sharga, RealtyTrac’s executive vice president, said in an e-mail. “We’ll probably see this trend continue for a while.”

Bank repossessions rose to 92,432 in April, up 45 percent from a year earlier, Irvine, California-based RealtyTrac said today in a statement. Foreclosure filings, including default and auction notices, fell 2 percent to 333,837. One out of every 387 households received a filing.

Unemployment of 9.9 percent and a rising percentage of homes worth less than the mortgages on them are combining to thwart a housing recovery, according to RealtyTrac. About 5 million delinquent loans will probably end up in the foreclosure process in addition to the 1.2 million homes already taken back by lenders, Sharga said.

Defaults may not peak until 2011 depending on how lenders process them, Sharga said.

“The underlying conditions -- mostly unemployment and millions of ‘underwater’ loans -- haven’t improved,” he said.

‘Very High Level’

Monthly foreclosure filings will remain “at a very high level that will not drop off in the near future,” James J. Saccacio, RealtyTrac’s chief executive officer, said in the statement. April marked the 14th straight month that foreclosure filings exceeded 300,000.

More than a fifth of U.S. mortgage holders owed more than their homes were worth in the first quarter, according to Zillow.com. The proportion rose to 23 percent from 21 percent in the previous quarter, the Seattle-based property service said this month.

Home prices may fall as much as 5 percent through the first quarter of 2011, according to forecasts from IHS Global Insight of Lexington, Massachusetts. Still, economist Patrick Newport said foreclosures may not get much worse.

“The key thing is fewer problem loans are going into the pipeline,” he said.

Defaults Drop

Default notices went to 103,762 properties, down 27 percent from April 2009 -- the peak month with 142,000 -- and down 12 percent from March, RealtyTrac said.

The numbers show fewer properties entering the foreclosure process as those that fell into delinquency earlier in the housing crisis finished the legal cycle.

Nevada had the highest foreclosure rate for the 40th straight month. One in every 69 households got a notice, more than five times the national average. Bank seizures rose 57 percent from a year earlier and filings were little changed, RealtyTrac said.

Arizona had the second-highest rate, at one in 169 households, or more than twice the U.S. average. Filings fell 1 percent from a year earlier. Florida ranked third, with one in 182 households. Filings there dropped 25 percent.

California had the fourth-highest rate, at one in 192 households, and Utah was fifth at one in 221, RealtyTrac said. Idaho, Michigan, Illinois, Georgia and Colorado also ranked among the 10 highest rates.

Five States

Five states accounted for more than half the total filings in the U.S., led by California’s 69,725. That was down 28 percent from a year earlier and 25 percent from March.

Florida ranked second with 48,384 filings, down 25 percent from April 2009 and 18 percent from March. Michigan was third at 19,173, a 77 percent increase from a year earlier.

Illinois had 18,870 filings and Nevada had 16,217.

Arizona, Georgia, Texas, Ohio and Virginia rounded out the top 10, RealtyTrac said.

The company sells default data collected from more than 2,200 counties representing 90 percent of the U.S. population.

U.K. home repossessions declined 7.5 percent in the first quarter as record-low interest rates helped more households meet their payments, according to the Council of Mortgage Lenders.

---With assistance from Timothy R. Homan in Washington. Editors: Sharon L. Lynch, Josh Friedman

To contact the reporter on this story: Dan Levy in San Francisco at dlevy13@bloomberg.net.

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