September Bank Foreclosures Reach New Record

Oct. 14, 2010— -- The nation's foreclosure epidemic gathered steam in September, with banks taking over more than 100,000 properties for the first time. Overall, filings rose 3 percent, according to RealtyTrac, an online service that tracks foreclosure rates.

More than 930,437 properties were hit with a foreclosure filing in the July-September quarter of the year -- that includes a default notice, repossession or scheduled notice. A.total of 288,345 properties were lost to foreclosure in the period, the most since the bust began.

Foreclosures are expected to fall following the decision by several of the largest lenders to halt filings because paperwork for many loans has been found to be missing or incorrect.

"We expect to see a dip in those bank repossessions — and possibly earlier stages of the foreclosure process — in the fourth quarter as several major lenders have halted foreclosure sales in some states while they review irregularities in foreclosure-processing documentation that has been called into question in recent weeks," said RealtyTrac CEO James J. Saccacio.

The foreclosure crisis in the U.S. began in 2006, when the stock market collapsed and unemployment began climbing to the highest levels since the Great Depression of the 1930s. Home prices collapsed in many states including California, Florida, Nevada and Arizona. Homeowners either couldn't pay or walked away from their mortgages, leaving the lenders with properties worth far less than the amount owed.

Now foreclosures have become a huge part of overall sales. For the month of September, foreclosed property made up 31 percent of home sales. The 24 states with the most foreclosure documentation problems account for 32 percent of all foreclosure property sales, according to RealtyTrac.

In the third quarter, one in every 139 housing units received a foreclosure filing. Nevada continued to reign as the state with the highest foreclosure rate with one in every 29 homes in some stage of going back to the lender. Next is Arizona, where one in every 55 homes have received a foreclosure filing. In No. 3 Florida, foreclosures affect one in every 56 homes.

For the first time ever bank repossession reached six figures with more than 102,134 homeowners losing their property in the month of September. The record numbers come after the Obama administration's Home Affordable Modification program sank to a 10-month low in August.