Posted by: Brian Powers | March 12, 2009

Foreclosure Filings Rise Again

This is a timely article in light of my last post a few days ago.  New foreclosure filings have a significant impact on the decreasing property values in most communities.  Until new foreclosure filings pull back it will be tough for property values to start to rise.

Most disturbing for many of us is Macomb county lead the way in southeast Michigan with a 62.5% increase in new foreclosure filings.


Foreclosure filings rise again

Michigan February activity increases 10 percent from January after declining for several months.

Nathan Hurst / The Detroit News

After months of falling foreclosure rates, Michigan saw a spike in filings last month.

Data being released today by RealtyTrac, a California-based firm that compiles foreclosure numbers, shows another 12,564 foreclosure filings were made last month throughout Michigan, a 14.67 percent increase from February 2008 and a 10.04 percent increase from January. More than half of those filings affect homeowners in Metro Detroit.

The state placed sixth nationwide for number of filings per household, behind the other foreclosure hotspots of Nevada, Arizona, California, Florida and Idaho. There was one foreclosure filing for every 360 Michigan homes in February.

The uptick came as another wave of homeowners saw their adjustable rate mortgages, or ARMs, reset to higher payments late last year. According to a 2008 Credit Suisse report, a higher than normal number of so-called “option ARM” loans — which allow homeowners to defer some principal payments at the beginning of the loan until later — were scheduled to reset at the end of the 2008 and into early this year.

Typically, those mortgages have a cap that allows the principal to accrue to a certain percentage of a home’s value, typically 120 percent. Plummeting home values here push loan balances up to that 120 percent cap sooner, forcing owners to make normal monthly payments of full principal and interest — which many can’t afford.

Michigan has the nation’s highest unemployment rate — 11.6 percent in January — and a rapidly sinking real estate market, putting many families here at risk of foreclosure.

Nationwide, temporary foreclosure prevention measures helped slow the market’s bleeding in recent months.

“The increase in foreclosure activity from January to February is somewhat surprising, given that many of the foreclosure prevention efforts and moratoria in place in January were extended through most of February as well,” said James Saccicio, RealtyTrac’s chief executive.

But it only lasted for a while. Many of those prevention measures expired last month, opening the door for a 6 percent increase in filings across the U.S. last month.

In Metro Detroit, Wayne County had the highest number of filings, with 3,412 last month, but actually saw a 29.05 percent decrease compared with the same month a year earlier. Livingston County also saw a decrease in filings, but Oakland and Macomb counties recorded big surges in filings last month; Oakland County recorded 25.12 percent more, Macomb had 62.5 percent more.

The wave of foreclosures has helped depress home prices, which have been, on average, halved during the past year, according to data released Monday by Realcomp, the Farmington Hills-based multiple listings service. The lower prices have helped move properties off the market, but a flood of new foreclosures could push the region’s inventory of homes back up again.

Economists, including Comerica Bank’s Dana Johnson, have predicted a continued rough ride for Michigan homeowners in 2009.

With the state’s beleaguered automotive and manufacturing sectors and rising unemployment, it’s unlikely homeowners will see much, if any, relief from falling home values and rising foreclosures this year, Johnson said.

“There’s not much good news out there for Michigan right now,” he said. “And that’s especially true of the housing market.”

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