Foreclosures Jump Again as Prices Slide
From Bloomberg:
U.S. foreclosure filings last month jumped 12 percent compared with a year ago as owners struggled with declining home values and higher adjustable mortgage rates.
More than 130,000 homes entered foreclosure last month, according to a report from RealtyTrac, an online listing of foreclosed properties.
Interest rates on about $775 billion worth of subprime loans -- those given to borrowers with bad or incomplete credit -- are scheduled to rise in the last nine months of 2007, according to Bear Stearns Cos.
One fifth of home loan borrowers have adjustable rate mortgages, according to Credit Suisse Group. About 15 percent of the $9.5 trillion U.S. mortgages are subprime, according to Bear Stearns.
"People who bought homes in the 1980s and 1990s started refinancing their equity out in the 2000s, so we can't assume that foreclosures will only affect people who bought their homes in the last couple of years," said Schahrzad Berkland, who publishes the California Housing Forecast in San Diego.
"And a lot of adjustable-rate mortgages were taken out by prime borrowers, so we can't assume that the more qualified borrowers will be immune to losing their homes."
Florida reported 19,144 houses entering the foreclosure process in February, the most of any state, RealtyTrac said. It was followed by California, with 16,273, and Texas, with 12,386.
Nevada posted the highest percentage rate last month with one foreclosure filing for every 278 households. Nevada's rate was 77 percent higher than in February 2006, RealtyTrac said.
"The rise in foreclosures over the past year probably only marks the beginning of the problem," Jan Hatzius, a Goldman, Sachs & Co. economist, wrote in a March 23 report.
"The main reason to expect further deterioration is that house prices are likely to fall significantly in 2007, with further declines possible in subsequent years."
The median U.S. home price was $212,800 in February, 1.3% less than a year ago and down 7.6% from a record in July.
U.S. foreclosure filings last month jumped 12 percent compared with a year ago as owners struggled with declining home values and higher adjustable mortgage rates.
More than 130,000 homes entered foreclosure last month, according to a report from RealtyTrac, an online listing of foreclosed properties.
Interest rates on about $775 billion worth of subprime loans -- those given to borrowers with bad or incomplete credit -- are scheduled to rise in the last nine months of 2007, according to Bear Stearns Cos.
One fifth of home loan borrowers have adjustable rate mortgages, according to Credit Suisse Group. About 15 percent of the $9.5 trillion U.S. mortgages are subprime, according to Bear Stearns.
"People who bought homes in the 1980s and 1990s started refinancing their equity out in the 2000s, so we can't assume that foreclosures will only affect people who bought their homes in the last couple of years," said Schahrzad Berkland, who publishes the California Housing Forecast in San Diego.
"And a lot of adjustable-rate mortgages were taken out by prime borrowers, so we can't assume that the more qualified borrowers will be immune to losing their homes."
Florida reported 19,144 houses entering the foreclosure process in February, the most of any state, RealtyTrac said. It was followed by California, with 16,273, and Texas, with 12,386.
Nevada posted the highest percentage rate last month with one foreclosure filing for every 278 households. Nevada's rate was 77 percent higher than in February 2006, RealtyTrac said.
"The rise in foreclosures over the past year probably only marks the beginning of the problem," Jan Hatzius, a Goldman, Sachs & Co. economist, wrote in a March 23 report.
"The main reason to expect further deterioration is that house prices are likely to fall significantly in 2007, with further declines possible in subsequent years."
The median U.S. home price was $212,800 in February, 1.3% less than a year ago and down 7.6% from a record in July.
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