Foreclosure activity up sharply despite loan modification program
The number of U.S. households caught in the foreclosure process during the first quarter jumped 7% from the prior quarter as activity increased sharply in March, a real estate firm will report Thursday.
Filings involving the later stages of foreclosure rose compared with the same period last year, according to RealtyTrac of Irvine, indicating that banks were beginning to repossess properties at a faster clip despite the Obama administration’s push to help borrowers.
“Lenders are starting to make a dent in the backlog of distressed inventory,” RealtyTrac Chief Executive James J. Saccacio said.
The government’s effort to help borrowers has improved, with 227,922 homeowners receiving permanently reduced monthly payments through March, a 35% increase from February’s tally, the Treasury Department said Wednesday. Additionally, more than 108,000 permanent modifications had been approved by lenders, the report said.
But a congressional panel evaluating the administration’s $75-billion program said that “Treasury’s response continues to lag well behind the pace of the crisis.”
Helping 3 million to 4 million homeowners avoid foreclosure through 2012 is the target of the Obama administration program. Last month, the administration unveiled heightened measures aimed at getting lenders to reduce principal balances on problem mortgages and to refinance borrowers who owe more than their homes are worth.
But critics want lawmakers to make modifications mandatory and allow bankruptcy judges to modify mortgages that otherwise would end up in foreclosure.
“Progress is being made, but it is so incremental,” said Kathleen Day, a spokeswoman for the Center for Responsible Lending. “We need a game-changer.”
Foreclosure filings were reported on 932,234 properties during the first quarter, a 16% increase from the first quarter of 2009, RealtyTrac said. In March, 367,056 properties got foreclosure filings, up nearly 19% from February and nearly 8% from March 2009. It was the highest monthly total since RealtyTrac began reporting the numbers in January 2005.
California accounted for 23% of the nation’s first-quarter foreclosure activity, with 216,263 properties receiving notices.