Foreclosures Reach Record Levels Across Country

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RealtyTrac Report Shows More Than 176,000 Americans Entered Foreclosure in May

A foreclosure sign hangs in front of a home in Miami. (Getty) By DANIEL ARNALL

ABC News Business Unit
June 12, 2007
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New data released this afternoon indicates that one in every 656 homes in the United States went into foreclosure during May.

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Irvine, Calif.-based RealtyTrac says more than 176,000 people got foreclosure notices last month. That is the highest figure they have ever recorded in their monthly report and is 90 percent higher than the numbers from a year ago.

"Such strong activity in the midst of the typical spring buying season could foreshadow even higher foreclosure levels later in the year," said James Saccacio, CEO of RealtyTrac, in a release accompanying the data.

Experts say the boom in foreclosure was expected.

Millions of Americans with poor or undocumented credit were given mortgage loans during the height of the housing bubble, and now that their adjustable rates are resetting higher, many face the prospect of losing their homes.

Six of the nation's largest lenders who specialized in these high-risk borrowers filed for bankruptcy earlier this year after investors lost confidence in the $600 billion subprime market when default rates started to rise.

For the past six months economists have been watching the mortgage market closely, attempting to gauge the impact of the shakeout in the subprime mortgage market.

"The principal source of the slowdown in economic growth that began last spring has been the substantial correction in the housing market," said Fed Chairman Ben Bernanke in a speech in late March. Bernanke has said the downturn in the housing market has shaved 1 percent off the nation's overall economic growth in the past year.

But the shakeout in the market is far from done.

First American CoreLogic analyst Chris Cagan said he believes about 1.1 million Americans will lose their homes to foreclosure in the next seven years because they cannot pay the increasing monthly mortgage bills after a reset.

Banks have started to tighten lending standards, making it harder for subprime borrowers to get a loan, but housing analysts say the damage has already been done. Several years of easy-to-get financing deals attracted many people into the market even though they would not have traditionally qualified for a home loan.

A RealtyTrac spokesman tells ABC News the nation's foreclosure rates will remain at elevated levels for at least another year.

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AMERICA LAND OF THE FREE HOME OF THE BRAVE--BECAUSE OF OUR CONSTITUTION.

this is not an indication of the economy... i can unerstand if the job numbers where down and unemployment was rising. But the forclosure are just Speculators or people who bought to much home for there money....

Which makes the forclosur'smore about PERSONAL RESPONSIBILTY and not the economy......

For once Gix, I agree with you to some degree. It is about personal responsibility, and people not researching what would happen farther down the road when their interest rates started going up. I am not an economist, but I wouldn't think that this could be good for the economy.

These people were reaching for the American dream. I can't really fault them for it. The sad part is, that home ownership, IMO, makes someone more connected to the community and a more responsible citizen. These are the people that would have had an investment in the future of that community.

Well...one man's forclosure is another man's bargain. However, I do wonder how the shakeout will affect the overall economy and banking industry. If the banks fail we're all in trouble.

This foreclosure trend is a result of CROOKS pure and simple. They over appraised the homes and loaned money on that inflated value. That way, even if the owners tried to sell the house to get out from under the rising payment, they couldn't get what they owe and are ruined. The law is now cracking down on those scam artists. It is an indication of the declining morality NOT a declining economy. But, I'm sure Rasta sees it as Bush's fault.

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Most of the world's crises can be tracked back to the fact that WE HAVE TOO MANY LAWYERS.
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Without women, money would have no meaning......Aristotle Onassis.

Ameriquest, one of the perpetrators of this scam, doesn't do business in Texas any longer. They had sold so many adjustable rate mortgages here using that scam, and now people's interest rates are increasing by up to 6% of the original rate. This opens the door for more unscrupulous con artists selling fixed rates mortgages further putting consumers in an upside down situation.

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"If you don't know where you are going, you will probably wind up somewhere else."
- Laurence J. Peter