US banks seizing homes at record levels
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Pastor Dale Morgan
Aug 13, 2010, 4:56:02 AM8/13/10
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Perilous Times and Climate Change
US banks seizing homes at record levels
Repossessions of houses and flats by major US banks is at close to an all-time high as the American housing market continues to struggle.
By James Quinn, US Business Editor
Published: 6:45PM BST 12 Aug 2010
A foreclosure sign sits in front of a home for sale in Stockton, California
Major US banks wrote off approximately $8bn (£5.1bn) on mortgages in the first three months of this year, on track to repeat – or even surpass - last year's full-year total of $31bn.
The news could have severe implications for the wider financial market, given it was problems in the US housing market which triggered the credit crisis back in 2007.
Fresh data shows that the number of US homes being repossessed due to mortgage arrears rose to 92,858 last month, up 9pc on June and up 6pc from the same month last year.
The figure is just 1pc below the all-time high – recorded in May this year – and comes amid renewed concerns about the amount banks are writing-off in mortgage-related losses.
Bank repossessions increased on a year-over-year basis in July for the eight straight month in a row.
According to industry researcher RealtyTrac – which provided the repossession statistics - the total number of US mortgage holders receiving a foreclosure notice – either a default notice, a notice of auction or a repossession order – rose by 4pc in July to 325,229.
RealtyTrac's Rick Sharga said he does not believe the US foreclosure rate will peak until some time next year, noting that July marked the 17th consecutive month that foreclosure activity was above 300,000 mortgages.
"Repossessions coupled with the fact that we're still looking at 5m seriously delinquent loans, many of which would normally already be in foreclosure, really suggests that what the banks are doing is managing inventory levels," said Mr Sharga.
But the problem is not just those mortgage holders who have already received foreclosure notices.
Earlier this week, research from property information website Zillow found that more than 20pc of US mortgages are 'under water' and subject to negative equity.
"It is the paramount challenge facing housing markets," said Stan Humphries, Zillow's chief economist. "We already have had record levels of foreclosure and, combined with high unemployment, negative equity is very toxic to the market."
The situation is being compounded by the slowdown in the sales market, with existing home – as opposed to newly built – sales falling by 5.1pc in June, as prices remain volatile.
US banks seizing homes at record levels
Repossessions of houses and flats by major US banks is at close to an all-time high as the American housing market continues to struggle.
By James Quinn, US Business Editor
Published: 6:45PM BST 12 Aug 2010
A foreclosure sign sits in front of a home for sale in Stockton, California
Major US banks wrote off approximately $8bn (£5.1bn) on mortgages in the first three months of this year, on track to repeat – or even surpass - last year's full-year total of $31bn.
The news could have severe implications for the wider financial market, given it was problems in the US housing market which triggered the credit crisis back in 2007.
Fresh data shows that the number of US homes being repossessed due to mortgage arrears rose to 92,858 last month, up 9pc on June and up 6pc from the same month last year.
The figure is just 1pc below the all-time high – recorded in May this year – and comes amid renewed concerns about the amount banks are writing-off in mortgage-related losses.
Bank repossessions increased on a year-over-year basis in July for the eight straight month in a row.
According to industry researcher RealtyTrac – which provided the repossession statistics - the total number of US mortgage holders receiving a foreclosure notice – either a default notice, a notice of auction or a repossession order – rose by 4pc in July to 325,229.
RealtyTrac's Rick Sharga said he does not believe the US foreclosure rate will peak until some time next year, noting that July marked the 17th consecutive month that foreclosure activity was above 300,000 mortgages.
"Repossessions coupled with the fact that we're still looking at 5m seriously delinquent loans, many of which would normally already be in foreclosure, really suggests that what the banks are doing is managing inventory levels," said Mr Sharga.
But the problem is not just those mortgage holders who have already received foreclosure notices.
Earlier this week, research from property information website Zillow found that more than 20pc of US mortgages are 'under water' and subject to negative equity.
"It is the paramount challenge facing housing markets," said Stan Humphries, Zillow's chief economist. "We already have had record levels of foreclosure and, combined with high unemployment, negative equity is very toxic to the market."
The situation is being compounded by the slowdown in the sales market, with existing home – as opposed to newly built – sales falling by 5.1pc in June, as prices remain volatile.
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