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Foreclosure rates now reaching pre-meltdown levels

By Catholic Online (NEWS CONSORTIUM)
April 11th, 2013
Catholic Online (www.catholic.org)

After years of disruption and many families losing their homes, it appears that things are finally getting back to normal in the U.S. Today, the number of homes lost to foreclosure is returning to levels not seen before the housing meltdown. Notices of default, scheduled auctions and bank repossessions during the first quarter fell 23 percent from a year earlier, the lowest level since the second quarter of 2007.

LOS ANGELES, CA (Catholic online) - Banks repossessed just under 44,000 homes in March. In stark contrast, in September 2010, repossessions topped 100,000 a month.

"We're getting back to normal and will be there by next year," vice president at RealtyTrac Daren Blomquist says.

Homeowners have begun to seek alternatives such as short sales, in which they sell their home for less than what they owe. The bank then agrees to forgive the difference.

The deals are preferred by the banks over foreclosures and have less of a negative impact on a consumer's credit score. Thanks to a healthier housing market, the need to turn to short sales is dwindling.

The Home Affordable Modification Program and Home Affordable Refinance Program have helped millions of borrowers avoid foreclosure. Under a $25 billion settlement deal with state and federal officials last spring, the nation's largest mortgage lenders agreed to help struggling borrowers by lowering their mortgage rates, reducing their principal and other fixes.

Blomquist says that the current landscape of foreclosures is starting to look a lot like it did in the pre-bust years.

Foreclosures continue to occur. A larger percentage of the nation's foreclosure activity is occurring in areas suffering from severe economic problems, such as "Rust Belt" cities like Rockford, Ill. and Chicago. This is in contrast when foreclosures were rife in recently-developed, mid-to-upper class neighborhoods of California, Florida and Arizona that were among the hardest hit when the housing bubble burst.

Many of the victims of foreclosure are now dealing with a layoff or personal issue, such as a divorce, illness or death in the family. People were forced to default due to plunging home prices and unaffordable mortgage terms.

Many states are still struggling with a backlog of foreclosures like Florida, Illinois and Georgia, all states where courts oversee the foreclosure process. Florida had more than twice as many bank repossessions as any other state in March -- nearly 7,600. Illinois, with more than 3,500, was second and Georgia, with 3,350, was third.

Blomquist says that the number of short sales should continue to fall, along with foreclosures.

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