Foreclosures Up 17% in Third Quarter (up 43% from 2005)

[TexasLawyer]

November 10, 2006
Foreclosures Up 17% in Third Quarter

Unemployment, resetting mortgages, and softening housing market to blame for more than 900,000 foreclosures across the country

by Douglas MacMillan
BW Exclusives

After plant closings, job cuts, and an anticlimactic World Series berth, the news only gets worse for Detroit in 2006. The city topped the quarterly list of metropolitan areas with the highest foreclosure rates in the country published by online preforeclosure and foreclosure listing database RealtyTrac, followed by Fort Lauderdale and Denver.

Nationwide foreclosure rates were up 17% from the second quarter, a time when the country was enjoying a relatively low number of foreclosures (see BusinessWeek.com, 8/10/06, "Foreclosures: Down, But Not Much Longer"). The rate is now up to one foreclosure for every 363 households, a 43% increase from the third quarter of 2005, when housing was booming and the adjustable-rate mortgage (ARM) loan payments of many homeowners were still low.

Detroit's high foreclosure rate, which gained 41.9% from the third quarter to a mark more than 4.5 times the national average, is an indicator of how reliably mortgage delinquency rears its ugly head when any area of the country faces a period of severe unemployment. Mostly as a result of the 2006 economic woes of the city's auto companies, Detroit's unemployment level nears 8%, about double the national average.
Pressure Points

At the same time that many residents in Detroit and other areas of high unemployment face layoffs, they run into a season when many ARMs will reset to high rates. Between $400 billion and $500 billion in ARMS are due to reset by the end of 2006—and $1.7 trillion due for the end of 2007. "We've never had the mix of loans that we have in the marketplace right now, with such a high percentage being adjustable, and a high percentage of those adjustables being subprime ," says RealtyTrac's CEO James Saccacio.

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http://www.businessweek.com/bwdaily/dnflash/content/nov2006/db20061110_250596.htm

[SammyWinstonJack]

1. Heckuvajob george!

:grr: Property taxes are killing a lot of home owners too. I know here in Texas, it's outrageous.

[TahitiNut]

2. It's a buyers' market in the ol' "ownership society."

The rich get richer and the poor get poorer. Far too many folks in their 50s and older have counted on the equity in their homes as a cushion ... particularly in the high housing cost areas like the San Francisco Bay, Los Angeles, Washington, D.C., and New York City. The 'plan' is usually to build equity in a family-sized home and then retire to a smaller home in lower cost areas. That's a "blu collar" attitude, built up over four decades of increasing housing costs. Timing is everything, though ... and wipe-outs are abundant. Enter the affluent upper 5% in real estate speculation.