Feb. 12 (Bloomberg) — U.S. foreclosure filings exceeded 250,000 for the 10th straight month in January as falling prices trapped owners in homes worth less than the mortgage, RealtyTrac Inc. said.
A total of 274,399 properties got a default or auction notice or were seized by banks, the Irvine, California-based seller of default data said in a statement today. It was the 37th straight year-on-year increase in filings.
“This is tough to fix, because so many people are underwater,” Bruce Norris, president of the Norris Group, a Riverside, California-based investment firm specializing in foreclosed properties, said in an interview. “Until debt goes down or prices go up, this is going to be a mess.”
The housing market lost an estimated $3.3 trillion in value last year and almost one in six owners owed more than their homes were worth, online data provider Zillow.com said last week. The U.S. economy shrank 3.8 percent in the fourth quarter, the most since 1982, and payrolls plunged by 598,000 in January, pushing the jobless rate to the highest level since 1992.
Home prices have fallen every month since January 2007 and tumbled 18.2 percent in November, according to the S&P/Case- Shiller index of 20 U.S. cities. President Barack Obama may support federal guarantees for modified home loans as the administration and Congress consider ways to help borrowers facing default or negative equity.
January filings fell 10 percent from the previous month because of “extensive foreclosure efforts on the part of lenders and government agencies,” including temporary moratoriums by mortgage-finance companies Fannie Mae and Freddie Mac and the state of Florida, James Saccacio, chief executive officer of RealtyTrac, said in the statement. Bank seizures fell 15 percent.
“Workout programs can help some people who intend to stay in the house, but the big problem is people who don’t want to carry an underwater house,” Robert Van Order, adjunct professor of finance at the University of Michigan in Ann Arbor and former chief economist at Freddie Mac, said in an interview. “Negative equity is not going away soon.”
The January total was the fourth-highest since RealtyTrac began records in January 2005, said Rick Sharga, executive vice president for marketing. One in 466 U.S. housing units received a filing.
“Hundreds of thousands” of home loans worth more than the property, or in areas where values have eroded by 50 percent or more, are “the root of the problem” and should have their principal reduced or deferred, Sharga said. A Feb. 10 speech by Treasury Secretary Timothy Geithner was “content free” about ways to stem foreclosures, he said.
Nevada had the highest foreclosure rate of any state as one in 76 housing units received a filing in January. Filings jumped 137 percent from a year earlier to 14,444.
California had the second-highest rate, one in 173 housing units, and the most total filings with 76,761, a 34 percent gain. Arizona had the third-highest rate, one in 182 housing units, while filings rose 62 percent to 14,674, also third-highest.
Florida had the fourth-highest, one in 214 housing units. Filings rose 35 percent to 40,770, the second-highest total. The state’s temporary moratorium caused filings to drop 20 percent from December, RealtyTrac said.
Other states with the top 10 highest rates were Oregon, Illinois, Michigan, Georgia, Idaho and Ohio.
Illinois had the fourth-highest total with 14,447 filings, an 85 percent increase. Michigan, Ohio, Georgia, Texas and Virginia also ranked among the top 10, according to RealtyTrac, which collects data from more than 2,200 counties that are home to more than 90 percent of the U.S. population.
New Jersey had the 17th highest rate, with 5,005 total filings, and New York ranked 38th with 3,496 filings.
California cities accounted for six of the 10 metro areas with populations of at least 200,000 that had the highest foreclosure rates, led by Merced with one in 59 housing units in a stage of default, almost eight times the national average.
Riverside-San Bernardino, California, was fourth, Modesto fifth and Stockton sixth. Vallejo-Fairfield ranked seventh and Bakersfield eighth, RealtyTrac said.
Las Vegas-Paradise, Nevada, had the second-highest rate at one in 63 housing units, and Reno-Sparks, Nevada ranked 10th. Cape Coral-Fort Myers, Florida, was third at one in 80 housing units and Port St. Lucie, Florida, was ninth, according to RealtyTrac.
To contact the reporter on this story: Dan Levy in San Francisco at email@example.com
Last Updated: February 12, 2009 00:01 EST
By Dan Levy