Home seizures in US reach record in April

Sign that recovery is being delayed by different bank focus

(SAN FRANCISCO) US home repossessions set a record in April while foreclosure filings dropped for the first time in four years - a sign that lenders may be delaying new default actions as they seize properties, RealtyTrac said.

RealtyTrac is the leading online marketplace for foreclosure properties and publishes the country's largest foreclosure database.

'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.'

A record 92,432 bank repossessions were reported in April, up 45 per cent from a year earlier and one per cent from March, Irvine, California-based RealtyTrac said yesterday in a statement. Foreclosure filings, including default and auction notices, were 333,837. One out of every 387 US households got a filing.

Unemployment of 9.9 per cent and a rising percentage of US 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, Mr Sharga said.

Foreclosure filings fell 2 per cent from a year earlier, the first decline since the company began issuing annual reports in January 2006.

Defaults may not peak until 2011 depending on how lenders process them, Mr Sharga said. 'The underlying conditions - mostly unemployment and millions of 'underwater' loans - haven't improved.'

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

Default notices went to 103,762 properties, down 27 per cent from April 2009 - the peak month with 142,000 - and down 12 per cent 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. -- Bloomberg

Source: Business Times, 14 May 2010