Bank Seizures Following Foreclosures Increase In Numbers

The number of bank seizures following on the footsteps of foreclosures has sharply increased in numbers. In comparison to July 2007, banks repossessed triple the number of houses this year in the same month. The number of units at risk from foreclosures spiked by 55% as falling real estate prices has made it difficult for borrowers to either sell or refinance. Bank repossessions increased by 184% to touch the count of 77,295. It is the steepest increase since January 2005 – the month from which RealtyTrac started reporting on foreclosure data. The national foreclosure rate shot up to 1:464 with 272,000 houses having been served a default notice. This notice is a warning about pending foreclosure auctions.

Rick Sharga of RealtyTrac opines that the situation is going from bad to worse. He said, “The number of properties that have been foreclosed on by the banks and still haven’t sold is the highest we’ve ever seen.”

The highest foreclosures continue to be in Nevada, Florida and California. The total number of foreclosures increased by 8% to touch 272,171. The record held in May counts to 273,001. RealtyTrac keeps track of about 1.5 million properties. In July banks came to possess 775,244 units compared to 445,000 in July 2007 and 224,000 in 2006.

Foreclosures are the prime cause for bringing down the price of house prices. Added to this cocktail of woes are rising unemployment and general slump in the economy. People do not have purchasing power in their pockets.

According Lehman Brothers Holdings the price of property fell by 15.8% in May. This is the highest fall since May 2001. One third of those who sold their houses in the second quarter did so incurring a loss according to Zillow.com a provider of foreclosure information based in Seattle.

In foreclosure activity the maximum movement is noticed in the segment of bank seizures. These units are known as REO properties or real estate owned. It accounts for 17% of the REO houses waiting to be sold.

In July default notices increased by 53% compared to what it was a year earlier. Auction notices went up by 11% according to RealtyTrac. In June there had been an ‘artificial depression’ due to new state laws aimed at helping foreclosure victims. Some states like New York, California, Massachusetts, Colorado and Maryland have ordered temporary hold on foreclosures. This will postpone the problem and do nothing more.