Number of Repossessed Houses Expected to Reach One Million in 2010

The latest figures covering the foreclosure market of the U.S. showed that repossessed houses will likely reach the one million mark before the end of the current year. According to real estate analysts, this is mainly due to banks starting work on backlogs of problematic housing loans at a quicker rate than they did during the last three months or so.

Housing market figures show that the number of residential properties taken over by banks rose by more than 30% during the first quarter of 2010 compared with the same period of the previous year. Houses that are in pre foreclosures status have also risen by more than 15% during the quarter and are 7% percent higher than previous year’s first quarter.

Market analysts reported that the first three months of 2010 also produced the highest number of residences that are scheduled for home auctions for sale since 2005. Analysts believe that the year is set to record at least one million homes taken over by banks.

Bank foreclosures slowed down for a bit in 2009 as the U.S. administration put pressure on banks to work out home loan modification agreements with homeowners. Several states also implemented moratoriums on foreclosures last year in the hope of buying homeowners some time to find ways to pay their mortgages. In addition, banks were overwhelmed by the sheer number of cases they needed to handle in terms of troubled loans.

All these factors contributed to the relatively low number of repossessed houses in 2009. However, there have been significant signs that the lull has come to a stop and repossession will be a major trend in the housing market for the rest of 2010. Banks, according to housing market observers, have started processing foreclosure inventories this year, something that they held off doing last year.

Foreclosure listings are expected to expand through the rest of the current year, with one out of every 138 households receiving foreclosure notices since the start of 2010. More homeowners are also set to contribute to the foreclosure problem as they failed to pay for their mortgages in time due to job losses and higher mortgage rates brought about by a reset in interest rate. Most of them were also unable to acquire refinancing since their homes are now worth less than the amount they owe on their mortgages.

In terms of the government’s foreclosure prevention efforts, market experts have stated that the $75 billion allocation has only helped a small portion of the country’s homeowners. More than 200,000 households were able to complete loan modifications under the government’s programs. This number is considered small and represents only around 21% of the total population of troubled borrowers.

It has also been reported that more than 150,000 borrowers who did sign up for the foreclosure prevention efforts eventually dropped out. The reason is either because they failed to complete the necessary documents or they failed to make the payments required under the modified schemes of the programs.

With more banks set to work through their inventory backlogs, real estate experts are expecting 2010 to produce at least one million repossessed houses. Nevada, California, Florida and Arizona remain at the top of the list in terms of areas with the highest rates of foreclosure.

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