Foreclosures to hit peak in '11

The bleakest year in the foreclosure crisis has only just begun for the nation.

Lenders are poised to take back more homes this year than any other since the U.S. housing meltdown began in 2006. About 5 million borrowers are at least two months behind on their mortgages, and industry experts say more people will miss payments because of job losses and loans that exceed the value of the homes they are living in.

"2011 is going to be the peak," said Rick Sharga, a senior vice president at foreclosure tracker RealtyTrac Inc. The firm predicts 1.2 million homes will be repossessed this year.

However, the Valley's foreclosure rate likely peaked in 2010 based on steady drops in pre-foreclosures during the second half of the year. December's count of 5,475 pre-foreclosures, or notices of trustee sales, is the lowest level for notice-of-trustee sales in the region since March 2008.

Nationally, RealtyTrac is predicting foreclosures this year will top 2010, when a record 1 million homes were lost.

One in every 45 U.S. households received a foreclosure filing last year, a record 2.9 million of them. That's up 1.67 percent from 2009.

On Thursday, Freddie Mac reported that fixed mortgage rates dipped this week for the second straight time, extending a sliver of hope for some homeowners.

The average rate on a 30-year mortgage dropped to 4.71 percent from 4.77 percent the previous week. The rate on a 15-year loan, a popular refinance choice, slipped to 4.08 percent from 4.13 percent.

But both are a half-point higher than the lows they reached in November. The 30-year loan rate hit a 40-year low of 4.17 percent and the 15-year mortgage rate fell to 3.57 percent, the lowest level on records starting in 1991.

The dip has led more borrowers to apply for a refinance, but would-be buyers remain hesitant, according to Wednesday's mortgage indexes from the Mortgage Bankers Association. It will take more than low mortgage rates to jump-start a housing market plagued by high unemployment, falling prices and tighter credit standards.

The glut of foreclosures has compounded the problem, and although the pace moderated in the final months of 2010, that isn't expected to last.

The number of homes that received at least one foreclosure-related filing in December was the lowest monthly total in 30 months. Total notices fell 1.8 percent from November and 26.3 percent from December 2009, RealtyTrac said.

Banks temporarily halted actions against borrowers severely behind on their payments after allegations of improper eviction surfaced in September.

However, most banks have since resumed foreclosures and the first quarter will likely bear that out, Sharga said.

Foreclosures, known as trustee sales in Arizona, ticked up slightly in the Valley to 49,808 from 47,992 in 2009. Last year's foreclosure number is artificially low because of Bank of America's two-month moratorium during October and November. Foreclosures in the region will be artificially high during the next few months as that lender catches up on its backlog. But most market watchers still expect the area's foreclosure activity to decline this year.

More than half of the country's 2010 foreclosure activity came out of five states in 2010: California, Florida, Arizona, Illinois and Michigan.

Nevada posted the highest foreclosure rate in 2010 for the fourth straight year, despite a 5 percent decline in activity from the year before.

Arizona and California also showed sharp December increases in the number of homes that banks reclaimed, at 52 percent and 47 percent, respectively. Arizona, along with Florida, finished the year at No. 2 and No. 3 for the highest foreclosure rates.

by Janna Herron Associated Press Jan. 14, 2011 12:00 AM





Foreclosures to hit peak in '11