ForeclosureS.com July 2007 Report: Houses Lost up 27% Over June

SACRAMENTO, Calif.--(BUSINESS WIRE)--Mortgage defaults and foreclosures continue at an alarming rate nationwide, swallowing up home ownership dreams for tens of thousands more Americans every month.

“The foreclosures will work their way through. As they do in the coming months, we’ll see more and more REO properties and REO auctions (Please see REO Auction Update below)”

Both pre-foreclosure filings and homes lost to foreclosure the first seven months of this year are up on all counts (per capita basis and in sheer numbers), according to the latest statistics from California-based ForeclosureS.com, which has been tracking and analyzing foreclosure and property information for 20 years.

“The numbers are dismal, but we had better get used to it because the blood-letting likely will continue for another 12 to 18 months,” says Alexis McGee, president of ForeclosureS.com and author of the upcoming book, “The ForeclosureS.com Guide to Investing: Making Huge Profits Investing in Pre-Foreclosures Without Selling Your Soul” (John Wiley, September 2007). “It’s a tough reality, but many more over-extended homeowners not even in default yet won’t be able to refinance because of tightened credit markets, and will eventually lose their homes to foreclosure,” adds McGee.

The recent blowup at American Home Mortgage is a reminder that the mortgage markets are very panicked and illiquid right now. American Home customers generally had good credit histories — an indication that the mortgage mess is no longer confined to risky subprime borrowers. Through the rest of this year and into next, a raft of adjustable-rate mortgages will begin adjusting to higher interest rates. The higher monthly payments may very well squeeze even borrowers with good credit histories, leading to a new round of mortgage defaults.

On a per-capita basis for the first seven months of 2007, 9 pre-foreclosures were filed for every 1,000 households (567,046 total filings), up more than 27 percent from nearly 7 filings per 1,000 households. That’s also up more than 83 percent from the 4.9 filings per 1,000 households for the same period a year ago, reports ForeclosureS.com, based on analysis of its nearly 3.5 million listings in more than 1,590 counties across the country.

Pre-foreclosure filings indicate homeowners that are in default on their mortgages, facing potential foreclosure, and trying to work out their financial problems. It includes notice of default filings or notice of foreclosure auction filings.

Here’s a month-by-month snapshot of how each *Region is doing year-to-date. Notice the 27% jump from June to July in new pre-foreclosure filings.

Regional Preforeclosures
Region	Households	January	February	March	April	May	June	July	Totals	Per Capita
Midwest	13,322,289	9,264	9,701	14,127	15,570	16,996	11,802	13,086	90,546	0.68	%
Southeast	16,359,083	16,445	19,128	26,326	21,532	27,620	19,931	27,511	158,493	0.97	%
Northeast	17,694,185	13,275	12,622	11,973	13,640	16,356	12,324	15,349	95,539	0.54	%
Southwest	26,174,730	31,280	32,284	42,826	34,843	45,158	33,785	43,276	263,452	1.01	%
Other States	2,403,078	1,011	1,074	1,819	1,527	1,326	1,176	1,199	9,132	0.38	%
Nationwide	75,953,365	71,275	74,809	97,071	87,112	107,456	79,018	100,421	617,162	0.81	%

Regions contain several states in a particular geographical location of the United States. Please http://www.foreclosures.com/stats/ and then Click a Region to display the states within.

Thousands of additional homeowners already lost their properties to foreclosure so far this year, too. As measured by REO (real estate owned by a bank or lender) filings, year to date, 3.7 properties for every 1,000 households in the United States have been lost to foreclosure. That’s up 24 percent from per capita numbers during the first half of 2007 and represents a total 294,539 REO filings (filing numbers are up 18.8 percent from the first seven months of the year).

Here’s a month-by-month snapshot of how each *Region is doing year-to-date. Notice the 24% jump from June to July in houses lost to foreclosure (REO).

Regional REOs
Region	Households	January	February	March	April	May	June	July	Totals	Per Capita
Midwest	15,862,818	11,170	9,253	13,571	11,821	14,728	12,487	13,089	86,119	0.54	%
Southeast	17,782,691	8,270	7,949	12,029	10,652	12,817	10,223	12,471	74,411	0.42	%
Northeast	17,563,990	1,242	1,127	2,461	2,405	1,955	2,058	2,600	13,848	0.08	%
Southwest	26,552,480	15,597	13,421	19,723	17,840	16,874	15,937	21,125	120,517	0.45	%
Other States	2,575,666	885	484	624	477	655	830	2,088	6,043	0.23	%
Nationwide	80,337,645	37,164	32,234	48,408	43,195	47,029	41,535	51,373	300,938	0.37	%

Regions contain several states in a particular geographical location of the United States. Please http://www.foreclosures.com/stats/ and then Click a Region to display the states within.

“The foreclosure outlook is not good, but it is not a cause for panic,” adds McGee. “In spite of the housing industry’s troubles, the nation’s economy, as measured by the 3.4 percent second-quarter growth in the U.S. gross domestic product (GDP), is going strong, and so is current consumer confidence in it.”

What’s really happening in the market goes beyond subprime loans — those issued to people with little or no credit — gone bad and subsequent foreclosure fallout. “The big picture is that the formerly artificial, overzealous housing and loose credit markets have adjusted too firmly and a clampdown in liquidity is the result. Liquidity refers to the availability of money to lend for housing for everyone.

“For the past few years as home prices appreciated almost out of control, so did the artificial and ‘creative’ financing environment that helped people who couldn’t really afford it buy their homes. Now, thanks to Freddie Mac’s lead in tightening lending qualification standards earlier this year, lenders are being extremely cautious on all levels. Home loans and refinancings now are being made only if potential borrowers meet full documentation income qualifications necessary to afford those mortgages,” says McGee.

“We went from ‘irrational exuberance’ in the housing and credit markets to fear and blood on the streets very quickly. We need to get to a place where it’s a balanced financing environment again to help stabilize our housing markets.”

“The foreclosures will work their way through. As they do in the coming months, we’ll see more and more REO properties and REO auctions (Please see REO Auction Update below),” adds McGee. “What worries me more about the future is a lack of liquidity in the market for all borrowers in general. What’s happening now with subprime and now alt-a lenders collapsing, lenders exiting the subprime market, industry consolidations, bankruptcies, and more, is that the institutional investors that provide cash to lending markets are panicking and pulling their money out.

“With tighter credit, fewer people will be able to qualify for home loans. As a result, we can expect to see a drop in overall homeownership rates nationwide — currently at an all-time high of 69 percent. Many of those people who lose their homes to foreclosure won’t get back into homeownership until they raise their income years later to better afford it.”

Let’s look closer at a few more July 2007 pre-foreclosure statistics from ForeclosureS.com:

• The Top 10 Counties nationwide for pre-foreclosures on a per capita basis, July year-to-date (they’re actually 11 because of a three-way tie for last place) include:

    -- Alpine County, California (that state's smallest county and in
       the Sierra Nevada): 39.3 filings per 1,000 households
    -- Lee County, Florida (which includes Cape Coral-Fort Myers
       area): 36.2 filings per 1,000 households
    -- Kendall County, Illinois (southwest of Chicago): 35.4 filings
       per 1,000 households
    -- Wasatch County, Utah (southeast of Salt Lake City): 34.4
       filings per 1,000
    -- Pinal County, Arizona (south of Phoenix): 33.3 filings per
       1,000
    -- Flagler County, Florida (north of Daytona Beach and including
       Palm Coast): 32.8 filings per 1,000
    -- Valencia County, New Mexico (south of Albuquerque): 32.4
       filings per 1,000
    -- Clark County, Nevada (which includes Las Vegas): 32.2 filings
       per 1,000
    -- Rockwall County, Texas (part of the Dallas-Fort Worth
       metroplex): 31.7 filings per 1,000 households
    -- Osceola County, Florida (south of Orlando and includes
       Kissimmee): 31.7 filings per 1,000 households
    -- Riverside County, California (which includes part of Greater
       Los Angeles): 31.7 filings per 1,000 households

• On strictly number of filings basis, seven of the above 10 counties showed triple digit increases in pre-foreclosure filings year-to-date 2007 vs. the same time a year ago.
• Kendall County, Illinois, for example, had 666 pre-foreclosure filings year-to-date, up 100 percent from the 333 the same time a year ago. It’s also the second fastest-growing county in the United States behind Flagler County, Florida (pre-foreclosure filings up 274 percent), and just ahead of Rockwall County, Texas, according to U.S. Census data. Pinal County, Arizona (Census ranks it as the sixth-fastest growing county) had a 180 percent increase in pre-foreclosure numbers.
• On the basis of pre-foreclosure filings per capita year-to-date, the top five states include Nevada (25.5 filings per 1,000 households; 19,044 actual filings), Florida (17.6 filings per 1,000 households; 111,020 actual filings), Colorado (14.5 filings per 1,000 households; 20,382 actual filings), Illinois (13.5 filings per 1,000 households; 52,696 actual filings), and New Jersey (12.2 filings per 1,000 households; 37,250 actual filings).
• California, perennial numbers leader in terms of pre-foreclosure filings, comes in sixth on a per capita basis with 11.5 filings out of every 1,000 households in the state (132,101 actual filings).
• The nation’s Southeast Region took over first place from the Southwest with 11.7 pre-foreclosures per 1,000 households in the region year-to-date.

Looking at July foreclosure numbers as measured by REO filings from ForeclosureS.com:

• States with the highest per capita numbers of properties lost to foreclosure year-to-date include Colorado in a tie with Michigan (9.4 foreclosures for every 1,000 households; 14,736 and 18,788 REO filings year-to-date respectively), Nevada (9.3 filings per 1,000 households), Georgia (8.5 filings per 1,000 households), and Indiana (7.8 filings for every 1,000 households).
• On a brighter note, however, in hard-hit-by-foreclosures Colorado a number of counties, including Adams, Arapahoe, and Denver, the number of REO filings actually was down year-to-date.
• The heavily industrialized and hard-hit by layoffs Midwest Region had the highest per capita incidence of foreclosure nationwide this year with 5.5 REO filings for every 1,000 households in the region.
• Michigan, Indiana, Ohio (6.7 filings per 1,000 households), and Missouri (6.6 filings for every 1,000 households) all were among the nation’s top 10 in terms of per capita REO filings year to date.
• The Northeast Region trails the rest of the nation in terms of REO filings per capita, with less than one filing for every 1,000 households.
• The Top 10 Counties nationwide for foreclosures on a per capita basis year to date include:

    -- Costilla County, Colorado (in rural southern Colorado): 253.5
       REO filings per 1,000 households.
    -- Valencia County, New Mexico: 47.3 filings per 1,000 households.
    -- Elko County, Nevada (in the northeastern part of that state):
       37.6 filings per 1,000 households).
    -- Mohave County, Arizona (in northwestern Arizona and includes
       Lake Havasu City and Kingman): 35.8 filings per 1,000
       households.
    -- Hood County, Texas (part of Dallas-Fort Worth Metroplex): 32.3
       filings per 1,000 households.
    -- Tangipahoa Parish, Louisiana (north of Lake Pontchartrain and
       bordering Mississippi): 31.3 filings per 1,000 households.
    -- Weld County, Colorado (north of Denver along Colorado's Front
       Range): 28.4 filings per 1,000 households.
    -- Garland County, Arkansas (southwest of Little Rock): 26.3
       filings per 1,000 households.
    -- Modoc County, California (heavily rural in northeastern
       California): 25.6 filings per 1,000 households.
    -- Elbert County, Colorado (east of Denver metropolitan area with
       an urban/rural mix): 21 filings per 1,000 households.

REO Auction Update: Buyers beware! REO auctions are a bonanza for banks, not buyers. Forget the hype and incessant promotion that buyers can snatch up tons of deals on foreclosed homes at these mega foreclosure property auctions popping up across the country. It has not proven true in 2007.

Instead, lenders and banks, their portfolios swollen with foreclosed properties, are raking in big bucks through these multiple-properties auctions that have become the latest real estate rage.

In fact, at a three-day auction of Southern California properties in May by the Real Estate Disposition Corporation (REDC), an affiliate of LandAuction.com Inc., the company boasts that it sold “Over $100 Million Dollars at 95% of sellers’ BPOs!”

BPO stands for broker price option, or the broker’s estimated selling price for a property. To put that in perspective, on average, most REO properties sold conventionally on the Multiple Listing Service (MLS) sell for only about 90 percent of their BPO price!

You are much better off working the Pre-Foreclosure opportunities in your area, to find great deals. They are everywhere.

About ForeclosureS.com: Sacramento-based ForeclosureS.com, publisher of foreclosure property information for more than two decades, has more than 3.5 million listings of current foreclosure filings covering nearly 1,600 major U.S. counties.

To ensure accuracy, ForeclosureS.com bases its foreclosure statistics on the numbers of formal notices filed against a property in the foreclosure process. In some states that can mean up to three filings against one property — notice of default, notice of foreclosure auction, and notice of REO — after a property has gone to foreclosure auction and a bank or lender takes possession of a property. In other states, it’s only two filings — auction notice and REO notice.

Whatever the case, the same property can be counted multiple times, and inaccurately skew the numbers. To avoid that, ForeclosureS.com reports only two sets of numbers, Pre-foreclosure (filings before foreclosure) and REO (after foreclosure) filings. You can read more about our accuracy here: http://www.ForeclosureS.com/www/pages/pressinquiry.asp

To get the details of what’s happening with foreclosures and housing markets in your state, region, and county, including year-to-date and month-to-month comparisons per capita and in filing numbers, please visit: http://www.ForeclosureS.com/stats

For foreclosure commentary please contact [e-mail] or call 800-310-7730 x112. For help accessing our Statistics Page please contact [e-mail] or call 800-310-7730 x3.