VA home loan delinquencies rose significantly last quarter nationwide. Foreclosure filings in the U.S. exceeded 300,000 for the sixth straight month as job losses that boosted the unemployment rate to a 26-year high left many homeowners unable to keep up with their mortgage payments. A total of 358,471 properties received a loan default or auction notice or were seized last month, according to data provider RealtyTrac Inc. That’s up 18% from a year earlier, and down 0.5% from July, the Irvine, Calif.-based company reported. One in 357 households received a filing. Home foreclosures rose from a year earlier as companies cut payrolls by 216,000 workers last month, boosting the U.S. jobless rate to 9.7% according to Labor Department data released last week.
The rise in unemployment is having a bigger impact than an effort by the U.S. government and banks offering loan modification plans and refinance loans for delinquent borrowers in an effort to prevent foreclosures, said Morris A. Davis, an assistant real-estate professor at the Wisconsin School of Business. “The foreclosure numbers are largely unemployment related,” Davis, a former Federal Reserve Board economist, said in an interview. “As long as 15 million Americans are unemployed, record foreclosures will continue.” Foreclosures aren’t abating even as demand is returning to the U.S. housing market after a three-year slump. The number of contracts to buy previously owned VA homes rose more than forecast in July and increased for a record sixth consecutive month, while mortgage buyer Freddie Mac said the average price rose 1.7% in the second quarter.
Las Vegas had the highest home foreclosure rate among metropolitan areas with a population of 200,000 or more. One in every 53 households received a notice in August, up 48% t from a year earlier and down 11 percent from July. Also in Nevada, the Reno-Sparks area had the seventh-highest foreclosure rate, with one in 86 households receiving a filing, RealtyTrac said. California had six metropolitan areas among the top 10. Stockton and Merced ranked 2nd and 3rd; Riverside-San Bernardino-Ontario, Vallejo-Fairfield and Modesto were fourth through sixth; and Bakersfield was tenth. New loan modification legislation is predicted to pass by the end of the month to prevent loan modification fraud, but will that bill inadvertently increase foreclosures because not many law firms and loan modification companies are willing to work for free.
