In June Foreclosures Spike By 53% In Usa

July 17th, 2008

The figures are alarming – in June foreclosures spiked by 53% in USA in comparison to June 2007. Nationally 252,363 foreclosures were noted. It was a decrease of 3% from May of the current year, according to ReatlyTrac. It calculated to a June foreclosure rate of 1:501. Except for 11 states all the others showed increases with Michigan, California, Florida and Arizona topping the list. By foreclosure all the different stages of foreclosure from default and auction notices to bank repossessions are referred to. Over 71,000 properties were taken over by the banks in June.

Each state is trying to find out ways and means to stem the tide. In Maryland a new law will give borrowers some time to get a breathing space. The time before starting foreclosure proceedings has been increased to 150 days. This led to a drop in foreclosures by 18% from the previous year. In Massachusetts a similar law had been passed but the drop had been only 3%.

A weak real estate, falling worth of houses, tight mortgage rules and a general slow down of the economy has left many families with no options but to surrender to foreclosures. Buyers are difficult to get with the value of the property having gone down to be less than the loan amount. This also prevents refinancing to more viable and affordable mortgages.

The apprehension by experts is that across the country 2.5 million houses will end up in foreclosure this year. In 2007 the number was 1.5 million. The mortgage industry has been trying to help borrowers but the sheer mass of numbers has overwhelmed them.

Treasury Secretary opined recently that not all foreclosures could be stopped. The borrowers took mortgages they could ill afford. It is inevitable that they will lose their houses. Those affected – the lenders, borrowers, government at local, state and federal levels as well as community organizations are supporting a new law that will allow Federal Housing Administration to sanction new affordable mortgages to the foreclosure victims. It is hoped that this will help them to refinance or sell the units. For this the lenders will have to waive large chunks of the principal loan. But in the long run it will be beneficial to the lenders considering the time, energy and money they have to spend to pursue the foreclosure process.

It was announced by White House that by Monday next the FHA expansion plan would be ready for implementation.