Foreclosures Inch Higher, Signaling Little Relief

Despite the government’s many efforts to curb foreclosures, filings keep piling up at a record pace -- and will likely continue to do so through the rest of the year.

According to RealtyTrac’s latest foreclosure report, April was another record month for foreclosures since it started issuing its report in 2005, with more than 342,000 new filings. At less than 1%, the increase over March filings was small, but surprising, says Rick Sharga, a senior vice president at RealtyTrac.

Usually, when foreclosure activity spikes in a given month, it drops off the next, says Sharga. But filings in April continued to climb even after a significant jump in March, when foreclosures spiked almost 17.5% higher from February. During that time, foreclosure freezes imposed at the end of last year by Fannie Mae (FNM), Freddie Mac (FRE) and many of the country’s biggest lenders expired and unleashed a backlog for foreclosure filings. Those filings, have now only started to make their way through the process, which can take anywhere between several weeks to several months, depending on where one lives.

In terms of foreclosure rates, Nevada, Florida, California and Arizona again lead the pack. Utah, Georgia, Illinois, Colorado and Ohio also made the top 10. In terms of foreclosure filings, the top 10 states accounted for more than 75% of foreclosure activity in April, which may be a sign that while the states with the most severe foreclosure problems continue to suffer, the rest are starting to show signs of stability, Sharga says.

As for a nationwide recovery, that still may be a ways off. Though the government’s loan modification and refinancing programs have been in effect since the beginning of March, they are just now starting to take off, says Celia Chen, senior director of housing economics at Moody’s Economy.com. And although the programs will help, they can’t reverse the tide of foreclosures, which are expected to set a record this year at 2.1 million. “It will not be until next year that we see the number start declining,” Chen says.