Foreclosure Filings Increase 48% In US - May 2008

July 4th, 2008

There has been a 48 percent increase in the month of May, 2008 in the US Foreclosure filings. A minimum of one foreclosure filing has been received by about 261,255 households throughout the nation in May. This is a great crisis situation that has provided a major setback to the real estate sector of US. A total of 10 states have been affected by the foreclosures. Among them, Michigan, Arizona, California, Nevada and Florida foreclosures are the highest rate of foreclosed homes.

The situation in Florida and California metropolitan areas is all the more worse. These include Cape Coral-Fort Myers in Florida, Calif and Stockton in California. A foreclosure filing has been received by one in every 118 homes in the month of May in Nevada. It is almost four times the US rate. Coming to California, a foreclosure filing has been received by one in every 183 homes. Some of the reasons that have been instrumental in avoiding the house foreclosures by the homeowners are as follows:

A hammered criteria of mortgage lending
Rising mortgage rates
A fall in the value of home
A weak housing sale strategy
A decelerating economy of US

This has further aggravated the real estate scenario of US. According to a company based in Calif., California, the lenders in the month of May approximately took back 74,000 properties across the nation. Moreover, about 58,000 have been sent default notices. Though the government as well as the mortgage industry has taken initiatives to tackle the problem of foreclosures, but there is still a long way to go to manage it.

Rick Sharga, the vice president of marketing of RealtyTrac, a company that keeps monitoring the default notices, feels that about an approximate of 50-60 percent borrowers who gets default notice will likely have to part with their homes. The increase in foreclosures will bring down the prices of the properties, which is detrimental to the growth of real estate sector. This phenomenon has been markedly noticed in Arizona, California, Nevada, and Florida where the price during the heydays were sky-high and has fallen like anything presently.

The sale of foreclosure and distressed properties is highly visible in some parts of the nation. Even in some neighborhoods, a major cutting down on prices is being done by the lenders in order to free them from a tremendous figure of foreclosed properties providing a positive push to the real estate.