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Mounting foreclosure rates in Utah, Illinois, Oregon and Arkansas metropolitan areas show how the home-loan distress is spreading to "previously insulated areas," Irvine, California-based RealtyTrac Inc. said today in a report. A record 3 million homes will almost certainly be seized this year, RealtyTrac has estimated.
"The dam will break and we'll see a significant increase in foreclosures," Michael Lea, a finance professor at San Diego State University, said in an interview. "The banks can't continue to hope the economy starts growing."
The U.S. jobless rate will most likely keep at 10 percent in 2010, according to the median estimate of 60 economists in a Bloomberg survey. Home prices that gained in the past six months will fade again after the government ends bearing the brunt for the mortgage market.
The Federal Reserve's $1.25 trillion program to buy mortgage-backed securities is set to conclude March 31, raising the danger that borrowing costs will increase. The purchases helped drive the rate on 30-year fixed U.S. home loans down to 4.71 percent in early December, the lowest level in Freddie Mac data going back to 1972.
"There is evidence that we're entering a new wave of foreclosures, driven more by unemployment and economic hardship than what we've seen over the past few years," James Saccacio, RealtyTrac's chief executive officer, said in the statement.
Sales of new homes dropped 7.6 percent in December, the Commerce Department reported yesterday, an indication that buyers who anticipated an finish to an $8,000 tax credit for first- time purchases stayed on the sidelines. Congress ultimately extended the benefit through June 30.
More borrowers are seriously delinquent and walking away from their mortgages even if they can afford the payments, said Lea, the San Diego professor.
Honolulu, Minneapolis and Seattle saw foreclosure filings increase at more than twice the national pace in 2009, a sign the catastrophe is increasing, according to RealtyTrac. Provo, Utah; Fayetteville, Arkansas; Portland, Oregon; and Rockford, Illinois, all had above-average foreclosure rates.
In Las Vegas, 12 percent of homes received a notice of default, auction or repossessions in 2009, more than five times the U.S. median. Filings there declined in the fourth quarter from the third, as they did in all 10 cities with the maximum rates.
Cape Coral-Fort Myers, Florida, had the second-highest foreclosure filing rate at 11.87 percent, RealtyTrac said. Orlando-Kissimmee ranked seventh, Port St. Lucie was ninth and Miami-Fort Lauderdale-Pompano Beach was 10th.
Merced, California, was third with 10.1 percent of households receiving a filing. Riverside-San Bernardino was fourth, Stockton fifth and Modesto sixth.
Phoenix had the eighth-highest rate, with more than 8 percent of households receiving a foreclosure filing in 2009, said RealtyTrac, which tracks default and auction notices and bank seizures in records dating to January 2005.
The company collects data from more than 2,200 counties representing 90 percent of the U.S. population.
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