No Slowdown in Foreclosure Filings

No Slowdown in Foreclosure Filings

Hardest-hit cities are on coasts and in Rust Belt, according to a new survey
By Les Christie, CNNMoney.com staff writer
Nov. 14, 2007

NEW YORK - California, Florida, and Ohio continue to dominate new foreclosure filings, as most of the nation saw increases in the third quarter, according to a new survey.

During the period ended Sept. 30, 77 out of the nation's 100 largest metropolitan areas reported rises in delinquencies compared with the previous three months, according to the latest report from RealtyTrac, an online marketer of foreclosure properties.

The three most affected states reveal the two main causes of mortgage payment problems: economic weakness, as exemplified by Ohio, and speculative excess that led to high home prices and unaffordable mortgages, as represented by California and Florida.

Making Good on a Bad Real Estate Bet

In the past few months, the foreclosure story has become a tale of two regions. Some of the hardest-hit states have traditionally been in the Midwest, where plant closings and job losses have hit the economy there hard.

The other region is the Sun Belt, which is showing even more significant foreclosure growth as out-sized price increases in the first half of the decade led to virtually unchecked real estate speculation.

According to the Center for Responsible Lending, 7.2 million households have subprime mortgages, and more than 14 percent of those are in default. It projects that one of every five of those loans issued in 2005 and 2006 will end in foreclosure, with 2.2 million families losing their homes.

Not every state has been clobbered, according to James Saccacio, RealtyTrac's CEO. "There continue to be pockets of the country - most noticeably metro areas in the Carolinas, Virginia, and Texas - that have thus far dodged the foreclosure bullet," he said in a statement.

But, nationally, foreclosure filings, which include all three main stages of foreclosure, default, or late payments, auction and real estate owned (properties reacquired by lenders and now being resold), were up 30 percent compared with the previous three months.

Among metro areas, the highest delinquency rate was in Stockton, Calif., which totaled 7,116 filings during the three-month period, one for every 31 households. Second was the Detroit area with one per 33 households and a total of 25,708. Half the cities in the top 10 were in California.

Several Massachusetts cities experienced huge delinquency jumps during the quarter. Boston filings soared 146 percent to one per every 220 households, Springfield's increased 151 percent (one per 172) and Worcester 122 percent (one per 150).

Filings in the Providence, R.I./ New Bedford, Mass. area climbed a whopping 295 percent, albeit from a low base, to one for every 549 households.

The metro areas least affected include Greenville, S.C. (one per 3,289), McAllen, Texas (one per 2,185) and Baton Rouge, La. (one per 2,074).