Foreclosures skyrocket 65% in April
— -- In a sign that the mortgage collapse is getting worse, not better, foreclosure filings surged 65% in April from April 2007, leading some analysts to warn that the crisis might not end before 2010.
One in every 519 households received a foreclosure filing — the highest such figure since RealtyTrac began issuing foreclosure reports in January 2005. Nationally, 243,353 homes were facing foreclosure last month, RealtyTrac said. That amounts to roughly 2% of all homes.
Signs that the crisis is accelerating include sinking home values, rising foreclosures, swelling supplies of homes for sale and tighter lending rules that have shut out some who want to buy homes or refinance their mortgages.
"For the foreclosures to stop, inventories have to stop rising, and home sales have to rise," says Mark Zandi, chief economist of Moody's Economy.com, who thinks foreclosures will continue rising well into 2009 and possibly till 2010. "We need prices to come down some more."
Congress is working on a bill that would let many borrowers facing foreclosure refinance with federally insured mortgages. The bill's prospects, though, are uncertain.
"Policy is essential," Zandi says. "If they don't do anything, this crisis will continue."
Foreclosure filings in April rose from a year earlier in all but eight states, according to RealtyTrac. Those hardest hit by the tsunami of foreclosures included Arizona, California, Florida and Nevada — states where runaway subprime lending and escalating home prices symbolized the real estate boom that fizzled in 2006.
"It will almost certainly get worse," Rick Sharga of RealtyTrac says of the foreclosure filings. "Unless the government does something, we'll probably see this go on. We would expect a spike (in filings) in the third and fourth quarter" of 2008.
Joel Naroff of Naroff Economic Advisors says he thinks foreclosures could persist at a high rate into 2010. "Prices are dropping and will continue to fall throughout the year," Naroff says. "People want to buy, but they can't get financing."
