Rising Loan Delinquencies Push Foreclosure Rate Higher – The Morning News in Northwest, Arkansas

Last updated Thursday, December 11, 2008 3:02 PM CST in Business


By Kim Souza




SPRINGDALE — One in 488 American households were in the midst of foreclosure last month, and another one in 10 were at least 30 days behind on their mortgage, according to a report released Wednesday by Realtytrac.


The report indicated 259,085 U.S. properties were in default, up 28 percent from a year ago. But market watchers say the worst may not be over as more and more Americans lose their jobs amid the weakest economy in three decades.


“Delinquencies on loans not yet in foreclosure jumped nearly 7 percent in the third quarter, a record high according to the Mortgage Bankers Association,” said James Saccacio, CEO of Realtytrac.


He said more than half of the homeowners who received loan modifications to reduce monthly payments in the first half of 2008 are already delinquent on their loans again, according to the U.S. Office of Thrift Supervision.


Saccacio said many of these delinquencies could turn into foreclosures next year.


Economists with Wachovia predict foreclosures will not likely top out until 2010, and say recovery in the housing market will be “agonizingly slow.”


Chief economist John Silvia said housing was the weakest link in their 2009 economic outlook published Wednesday.


“We do not expect to see anything approaching strength in the housing market until 2011,” Silvia said.


The national forecast is bleak for sure and locally the foreclosure numbers look worse.


Benton County still ranks No.1 statewide with 476 foreclosures last month, up 185 percent from a year ago. One in 170 households were facing foreclosure last month. Realtytrac reported 190 homes were posted for auction on the court house steps, another 249 were already owned by banks and 37 were at least 60 days past due.


Part of the local foreclosure problem relates to investor ownership in properties that were built during the region’s market peak — 2006.


One investor group led by Springfield, Mo.-based Greenleaf Companies report nearly 30 foreclosures in one Centerton subdivision, Kensington Hills. The group solicited investors, many who got adjustable rate mortgages and then resold the homes on a contract for deed agreement. Another subdivision, Char Lou Estates, has nearly a dozen homes slated for auction or already taken back by the lender, according to Crye-Leike Realtor Vickie Briolet.


Tighter credit requirements and deteriorating wealth from stock market losses have prompted some investors to walk away, one investor recently told The Morning News.


Washington County did not fare much better, ranking second statewide. The county reported 224 foreclosures in November, up 149 percent from a year ago. One in every 357 households were in the midst of foreclosure, 156 homes posted for sale and 68 already surrendered to banks.


Other counties in the region report healthier numbers. Madison and Carroll counties had just two foreclosures each last month, while McDonald County Mo. reported none.