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A pre-foreclosure sign is displayed outside a home Oct. 1, 2009, in Miami, Florida. (Joe Raedle/Getty Images)
Signs of a slowdown in national foreclosure activity were reported in a market survey released on Thursday, but the heat is not off residential housing yet.
Foreclosure filings were down by 2 percent in February, according to the RealtyTrac report, with 1 in every 418 U.S. housing units receiving a foreclosure filing last month.
For the 12th straight month, more than 300,000 properties received foreclosure filings. So while February was an improvement over January, foreclosure rates were still 6 percent above what they were in February last year, the report said.
Despite the small positive sign, RealtyTrac Senior VP Rick Sharga cautioned against taking it as an end to the crisis.
It was the snow, the severe winter weather in February seemed to be a huge factor in slowing things down, Sharga said.
“We’re expecting a jump in March,” he said. “How much of a jump will depend on how good a job the lenders are doing getting through the evaluation process.”
Lenders and servicers are currently wading through 5 million delinquent loans, Sharga said.
“We think mostly what we are seeing is a delaying of the inevitable,” he said of the slowdown in February foreclosure rates.
The hardest hit states have remained at the top of the statistics pile for 38 months. One in every 102 Nevada housing units received a foreclosure filing during February—more than four times the national average, the report says.
Arizona and Florida documented nearly identical foreclosure rates, with 1 in every 163 housing units receiving a filing in both states.
The six states with the most foreclosure activity accounted for 61 percent of the national total in February. California led the way for volume, with 68,562 properties receiving a foreclosure filing during the month—down nearly 5 percent from the previous month and down 15 percent from February 2009.
Programs such as the Home Affordable Modification Program (HAMP) are “inadvertently or accidentally” slowing down foreclosures, but they’re not really preventing foreclosures, Sharga said.
“We really haven’t seen anything that has had a major effect on actually preventing foreclosures.”
Lenders are processing loans via the HAMP after people fall behind in their mortgage payments. The HAMP is the Obama administration's mortgage modification program designed to stem the tide of foreclosures.
More than 116,000 homeowners received long-term reductions in their mortgage payments in the year since HAMP was set in January 2009. An additional 3 million struggling homeowners are waiting for permanent or trial modifications to begin.
The biggest problem is that loans are worth more than the properties they were written on, Sharga said.
“And really, whether it's hundreds of billions or trillions of dollars of value that’s been lost in the market over the last few years, all these programs are dancing around the issue, which is really ‘who takes the hit?’”
Who ultimately pays for the loss in value is not clear yet, he said. “Is it the homeowner, the lender, or does the government step in and it ultimately becomes the taxpayer?
“Until that issue is resolved, we’re really not going to see much in the way of a program that changes the numbers,” Sharga said.
The residential housing market is still looking sturdier than commercial real estate, which is expecting a big bust to the tune of $1.4 trillion in debt over the next five years.
