Repossessed homes for sale in Palm Beach, Florida are still surging as foreclosure filings continue to rise in the area, according to a real estate information provider.

In February this year, about 4,490 households in Palm Beach County received default notices and foreclosure deeds, marking a jump of 63 percent from the previous month and an increase of 68 percent from February 2009.

In nearby Martin County, foreclosure activity also stepped up, posting a 52-percent increase from January and a 13-percent jump from February 2009. In Saint Lucie County, foreclosure postings rose by 69 percent month-over-month and climbed up by 39 percent year-over-year.

Across Florida, foreclosure activity stepped up by 15 percent, while across the country, foreclosures slowed down by 2 percent.

Bill Davis, mortgage banker who heads Private Funding Specialists, said that the still rising unemployment rate and the still declining home values have been forcing homeowners into default and foreclosure.

After a time of holding on to their homes, homeowners got exhausted, and with their savings also wiped out, they gave up.

Davis contended that the surge in repossessed homes for sale was a result of one or a combination of three causes: more borrowers deliberately defaulted, lenders pursued and completed more foreclosures, or courts were able to move more of their foreclosure backlog.

For Myles Minns and other real estate investors, the increase in foreclosures also meant an increase in earning opportunities for them. Minns has been buying and reselling five properties a week, with some of them fixed and rented out.

In Florida, the judicial system for foreclosures is another factor for the unpredictable flow of foreclosures into the market. With all courts overwhelmed with foreclosure cases, many properties are in uncertain situations, holding up the foreclosure process and preventing these assets from getting sold and used.

When these properties are finally foreclosed upon, oftentimes they are released to the market at one time, driving prices further down. In Palm Beach County, prices of homes have plunged by 43 percent from peak levels in 2005.

In one report from another real estate firm, home prices in the metro area covered by Palm Beach, Miami and Fort Lauderdale were cut down by 14.9 percent, the highest among the areas surveyed.

The firm also reported that around 45 percent of all mortgages in Palm Beach County are underwater. With these figures, the number of repossessed homes for sale is expected to rise further and home prices are expected to fall down further.

Sales of houses repossessions climbed up in Colorado in January this year amid a decline in foreclosure filings, based on records from the Colorado Division of Housing.

A total of 1,917 foreclosed homes in Colorado were sold in January, an increase of over 60 percent from January last year. In contrast, foreclosure filings slowed by 3.2 percent to 2,729 filings from 2,819 filings in January last year.

Division officials said that foreclosure sales typically lag filings by 6 to 8 months. Compared to housing activity in January 2008, both sales and filings slowed down.

In Weld County, foreclosure sales involved 161 units, a 71.3-percent jump from January 2009 but a 31.2-percent drop from January 2008. Similar to the statewide trend, filings also slowed, with 213 foreclosure cases filed, a drop of almost 18 percent from January last year and 16 percent from 2008.

Larimer County also followed the state trend, posting 137 foreclosure filings, down by 10.5 percent from January 2009 but up nearly 27 percent from 2008. Sales of 98 houses repossessions were posted in January, a 53-percent jump from January 2009 but 12.5-percent down from 2008.

According to real estate analysts, in addition to sharply rising unemployment, negative equity has been a major cause in continued defaults and foreclosures across the country.

Nationwide, according to a real estate information firm, 24 percent of homeowners with mortgage loans had negative equity in the final quarter of 2009, an increase from 23 percent in the previous quarter.

In Colorado, more than 20 percent of owners of mortgaged homes had negative equity and another 8 percent nearing the underwater situation.

In the Loveland-Fort Collins metro area, almost 9 percent of homeowners with mortgage loans were underwater and another 6 percent were nearing the negative-equity situation.

In Greeley, 37 percent had negative equity and another 10.2 percent were approaching the underwater situation. To get the negative equity estimates, the research firm studied details of 47 million mortgage loans in the country, which cover over 85 percent of all home loans in the country.

In December last year, the unemployment in Colorado rose to 7.5 percent from 5.8 percent in December 2008, based on data from the Colorado Department of Labor and Employment. The number of unemployed Colorado residents increased by 14,900 to 198,400 in December.

In another foreclosure report for January this year, although foreclosure activity slowed possibly due to the post-holiday atmosphere, Colorado still posted a total of 1,782 houses repossessions during the month.

The 500-member association has been lobbying for a bill that would allow non-judicial foreclosure proceedings in Florida starting July 1 this year. Non-judicial foreclosures would allow mortgage banks to foreclose on delinquent homeowners without filing cases in court.

In effect, judges would no longer have a say on foreclosures. Lenders can immediately foreclose on borrowers in default and can force them out of their houses quickly, in as short a time as three months.

Florida, which has been known for being fierce in protecting homeowner rights, is one of several states that have been implementing judicial foreclosure for decades. California, Texas, Alabama, Georgia and 33 other states have already approved non-judicial foreclosures.

With the lobbying power and determination of the banking association, they could get their way and add thousands more to the almost 517,000 foreclosure cases already filed statewide in 2009.

As travel- and tourism-related businesses slowed down in Florida and as the unemployment rate rose over the past several months, the number of repo homes for sale also increased. In December, the unemployment rate rose to 11.8 percent, up from 11.5 percent in November. It meant that more than one million Floridians were out of work as of December, out of a 9.18-million labor force.

Based on the provisions included in the bill, non-judicial foreclosure proceedings must be completed in not less than 3 months and not more than one year. With court involvement, foreclosures can take one year or two years to get done, and longer if lawyers launch an additional legal strategy.

The bill would also effectively nullify the mandatory mediation initiative recently launched by the state Supreme Court. The bill only provides for informal talks between lenders and borrowers.

The bankers also proposed to have the right to pursue delinquent homeowners for the unpaid portion of the mortgage debt even if they have already been evicted from their homes. They nevertheless provided a waiver under which they will forgive the full amount of the loan if borrowers do not trash the properties after they are foreclosed.

According to banking association head Alex Sanchez, the bankers want to help communities manage repo homes for sale, help housing associations collect dues from delinquent properties and to help courts overwhelmed by thousands of foreclosure and bankruptcy cases.

More than 27,000 homes entered foreclosure in the counties of Manatee, Sarasota and Charlotte in 2009, a jump of 20 percent from foreclosure actions in 2008.

In Sarasota and Manatee, one homeowner out of every 19 residential units was notified of foreclosure, and in Charlotte, one out of every 15 residential units fell into default or foreclosure.

In December, 447 homes in the county of Sarasota were taken back by banks, a significant jump from only 97 in the previous month. Sarasota posted the fourth biggest number among Florida counties in December.

While Sarasota registered a month-over-month increase in December, foreclosures in Charlotte and Manatee dropped by ten percent from November, although Charlotte posted a 12-percent increase compared to December 2008.

Despite being a smaller county based on population, Sarasota posted much higher foreclosures in December than counties with much higher number of households such as Orange County, Palm Beach and Hillsborough County. Orange County posted 281 repo houses for sale in December, Palm Beach posted 261 units and Hillsborough posted 251 units.

Real estate businesswoman Kathy Marlowe said that the number of bank-repossessed properties increased in 2009, particularly in Sarasota, but she added that banks are still holding off on a lot of properties, either by not releasing properties in their current inventories or by not completing their foreclosure proceedings.

Marlowe said that buyers are looking for more foreclosure properties in Southwest Florida, but banks have been regulating the release of units into the market.

Additionally, foreclosure numbers could have been higher in the region if the state mediation program and other nonprofit-sponsored foreclosure prevention initiatives were not implemented.

Statewide, nearly 517,000 residential units entered foreclosure in 2009, with more than 55,000 units notified in December. December marked another month of increases, as total foreclosures for the month marked a four-percent jump from November and a nine-percent jump from December 2008.

Real estate consultant and analyst Jack McCabe stated that foreclosures will still increase in Florida in 2010 because of continued economic difficulties.

McCabe also said that the refusal of banks to reduce principal amounts is also seen as a major reason for the failure of the Home Affordable Modification Program to cut down the number of repo houses for sale in Florida and in other states.

In November, total foreclosure filings throughout the country fell by eight percent to around 307,000, the fourth straight month that total foreclosure postings dropped after reaching the highest level of 360,000 filings in July. The November figure also marked the lowest monthly total since February.

Another positive finding was the drop in foreclosure filings in Nevada, the second straight month that filings fell in the state. Las Vegas, which previously topped metro area foreclosure rate charts, also showed a significant improvement, falling to fifth place in ranking in November.

However, mortgage and housing analysts contend that the reported consecutive drops in foreclosure filings are artificial and that they do not show the real foreclosure situation. They reiterate that federal and state loan modification and mediation programs, in addition to the efforts of banks and servicers to control the number of lower-priced repo homes reaching the market, have been holding back foreclosure numbers.

Foreclosure experts believe that there will be another wave of foreclosure postings next year as the true results of loan modifications appear in 2010. Mortgage analysts said that falling home values, tight credit and unemployment will push more homeowners into foreclosure, including those whose mortgages were successfully modified into lower monthly payments.

In Nevada, the pace of foreclosure slowed down because the state launched a mandatory mediation scheme in which lenders must meet with troubled homeowners and work out an affordable repayment scheme. As state officials hoped, the mediation scheme will prevent a number of homes from getting foreclosed, but analysts who have seen the performance of modified loans in other states believe that many of these mortgages will ultimately go into foreclosure.

William Campbell, a property consultant and head of Arkansas-based RPC Group, said that out of about 7 million distressed home loans in the country during the current crisis, 3.9 million loans will fall into foreclosure. He explained that the loan modification workouts will only delay foreclosure for a lot of homeowners.

Another reason for the expected rise in foreclosures next year is the country’s bleak unemployment situation. In October, the jobless rate hit 10.2 percent, its highest level in 26 years. With a sharp rise from 9.8 percent in September and with another net job loss of 190,000, a lot of homeowners will not be able to save their houses from becoming repo homes.

According to the firm, credit card delinquency rates in the July-September quarter were highest in states with the highest rates of foreclosure filings. The highest credit card delinquency rates occurred in Nevada, where the delinquency rate was 1.98 percent; in Florida, where the card default rate was 1.47 percent; and Arizona, where the rate was 1.35 percent.

These three states also topped the foreclosure rate chart in the July-September quarter, which was compiled by a California-based real estate research firm. Nevada was first in the chart, with a foreclosure ratio of one in 23; Florida was fourth, with a ratio of one in 56; and Arizona was second, with a foreclosure rate of one out of every 53 housing units.

Based on an analysis by the Mortgage Bankers Association, these three states, together with California, accounted for 43 percent of all foreclosure filings and bank repo houses throughout the U.S. in the July-September quarter.

According to TransUnion, credit card delinquencies declined by almost 6 percent during the quarter, but this improvement in the credit card market is being threatened by initial reports that one-month delinquencies in October have been rising.

In the July-September quarter, the rate of credit cardholders in default by 3 months or more on one bank-issued credit card or more decreased to 1.1 percent, down by 5.98 percent compared to the April-June quarter. If compared to credit card delinquencies during the same quarter last year, the delinquency rates are about the same.

The average credit card debt for individual borrowers also dropped during the quarter, as consumers tried their best to control their spending. The average debt owed to issuers of bank credit cards fell to $5,612, down by 1.9 percent from the second quarter average debt of $5,719 and down by 1.7 percent from the average debt of $5,710 during last year’s third quarter.

According to TransUnion, the quarterly decrease in delinquency rates in the July-September quarter was the first time that the rates dropped in 10 years.

Additionally, TransUnion contended that credit card delinquency rates decreased, not only because of consumer efforts to reduce their debt levels and manage the effects of large numbers of bank repo houses, but also because of the decision of card issuers to increase their interest rates, reduce credit limits and close under-used card accounts.

In the July-September quarter this year, the number of foreclosed properties in the books of the U.S. unit of HSBC dropped to 6,266 units, down by 12 percent from the 7,105 units it had in the April-June quarter. New foreclosures also dropped, falling to 3,448 in the July-September quarter from the previous quarter’s count of 3,463.

The more than 6,000 foreclosed homes in HSBC books in the July-September quarter are still relatively high, but they represent a substantial decrease of 43 percent from the 10,887 repossessed units during the same period in 2008, which included 5,416 new foreclosures.

The third quarter report also showed that HSBC sold its foreclosure properties faster compared to past quarters, selling them in 184 days on average. In the first quarter, repossessed properties sold in 201 days on average.

According to Nomura banking analyst Robert Law, the faster movement of repossessed homes helps banks convert their problem collaterals into cash.

During the quarter, HSBC lost an average of 8.4 percent from the sale of bank owned repossessed homes, down from its average of almost 13 percent in the April-June quarter and from the nearly 17 percent of loss in the first quarter. According to HSBC, home prices stabilized in the July-September quarter, enabling the bank to sell its foreclosures at higher price levels.

HSBC said that one of the reasons its number of repossessed properties has not increased was its effort to comply with federal mandates to modify loans and prevent foreclosures. So far this year, HSBC has completed modification for 95,000 troubled mortgage accounts, an increase from the 92,500 mortgages it modified last year.

Based on records, HSBC entered the subprime market in the country when it acquired mortgage lender Household International in 2003 and then quickly accumulated a lot of risky home loans. So far, HSBC has posted $67 billion in charges due to its bad home loans in the country. Early this year, the bank announced its plan to exit the consumer lending market, except the credit card market, but reiterated its commitment to continue servicing its existing home loans.

HSBC expects more bank owned repossessed homes in its inventory in the coming months but expects improvements in the other portions of its consumer lending operations.

Erchul said that Dayton’s Bluff and its nearby areas in Saint Paul have the second highest number of foreclosure houses in the entire state, second only to North Minneapolis, which tops the foreclosure list in the state.

In the third quarter of this year, more than 10,600 homes in Minnesota were notified of foreclosure postings and out of these postings, more than 5,100 were already repossessed by lenders. With a foreclosure rate of one in 217, Minnesota ranked 18th in a chart of U.S. states based on foreclosure rates.

Erchul also added that a lot of the foreclosure properties in Saint Paul have been left vacant by lenders including Fannie Mae and Freddie Mac and are waiting for buyers.

To help put people into these foreclosure properties, Erchul and his community development group DBNHS have been providing low-interest loans to prospective home buyers for repairs and rehabilitation.

DBNHS has also been purchasing repossessed houses for sale, fixing them and then selling them to families earning incomes not higher than 80 percent of the median income in Saint Paul.

The nonprofit, which was launched in 1980, has helped construct or fix 2,000 residential units and has spent $120 million helping protect the area from falling into decay.

In October, it launched its pilot program First Look, which was designed to acquire over 600 foreclosure homes and buy 18 properties to rehabilitate and resell to lower-income families.

From time to time, Erchul receives emails from lenders asking him to take at look at certain foreclosed properties if his program wants to include the properties. What Erchul does is to send his appraiser to examine the properties and see if it is profitable to buy.

DBNHS has also received financial assistance from foundations, including the Pohlad Family Giving Foundation which has recently provided DBNHS with $1 million to help homebuyers. Pohlad said that home buyers can get up to $8,000 from the fund for closing costs or down payment, but they need to live in the purchased properties for at least seven years.

According to Erchul, DBNHS does not only focus on repossessed houses for sale. It also maintains affordable rental housing for lower-income families that move to the area so their children can attend local elementary schools.

For example, a homeowner was told by his mortgage lender last March that he is eligible for the federal home loan modification program that would reduce his monthly payments into affordable terms, make his account current and allow him to remain in his distressed property.

But that was the last time he heard from his bank until it contacted him last month and informed him that his foreclosed home would be sold sometime August. He did not receive any documentation informing him that his mortgage was passed by his original lender to a second and then a third bank.

This is a common experience among a growing number of troubled homeowners as banks are swamped with the volume of loan restructuring requests. However, they pointed out that banks were unprepared for the volume of loan modification requests that they received since the inception of the federal program.

According to industry experts, banks want to help distressed homeowners avoid foreclosures and remain in their houses but could not keep up with the load of modification requests, creating a huge backlog and leaving many homeowners unable to save their properties from foreclosures.

Bank delays are also causing a problem to homeowners who are trying to sell their distressed properties at short sales, meaning for less than the amount of their unpaid mortgage. Some of them have found buyers for their homes but their problem was, especially to those who took out a second loan, that holders of their second mortgages refused offers of loan payoffs, thus causing undue delays in the sale deals.

According to industry analysts, bank delays are indications that banking institutions are overwhelmed by the load of loan modification requests. They said that time is of the essence in any loan modification case.

Once a notice of foreclosure has been issued, the proceeding starts right away. And when troubled homeowners start the long and tedious process of loan modification, another timetable is created. They said that the trick is for homeowners not to let the foreclosure process run its full course before the mortgage renegotiation procedure is done.

Kenneth Lewis, CEO of North Carolina-based Bank of America, downplayed the popular view that the big banks are apathetic about the needs of consumers and to the situations of homeowners whose houses are at great risk of becoming bank repossessed homes.

Lewis pointed out that he, as head of the biggest bank in the U.S., knows what is going on across the country. He predicted that the country’s recession will end in the last months of 2009, but the 9.5-percent employment rate will continue to rise in the coming months, even up to 2010.

The CEO also reiterated that the banking industry should not be blamed solely for the record numbers of bank repo homes that continue to plague many parts of the country.

He explained that banks deserve some of the blame, but that all blame should not be directed towards the banking industry. He said that unregulated investment banks, hedge funds, mortgage brokers and lenders deserve more of the blame.

Bank of America is considered the country’s biggest consumer lender based on assets, but it cut down its consumer and small business lending sharply when the housing market collapsed and large numbers of bank repo homes arose.

In the bank’s financial report for its second quarter, consumer loans declined by three percent compared to its previous quarter, and commercial loans dropped by 2 percent.

But bank officials said they have provided a total of $211 billion in loans in the second quarter, an increase from the $183 billion extended in the first quarter.

Lewis also said that his bank modified nearly 150,000 home loans and has provided around $400 billion in loans in the first 6 months.

Based on Treasury Department data, the bank, which received a total of $45 billion in bailout funds, and other big banks increased their lending in the second quarter despite a decline in total U.S. lending.

As a word of advice to his colleagues, Lewis called on other banks, mortgage lenders and servicers to intensify their loan modification activities in order to help more American homeowners prevent their houses from becoming bank repo houses.