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The May foreclosure numbers from Realty Trac show a six percent decrease in Foreclosure filings—default notices, scheduled auctions and bank repossessions—over April and several media outlets decided the report was good news.

Take Another Look at May Foreclosures

The May foreclosure numbers from Realty Trac show a six percent decrease in Foreclosure filings-default notices, scheduled auctions and bank repossessions-over April and several media outlets decided the report was good news.

Take a look behind the headlines. First, the foreclosure numbers for May are the third highest month on record, an 18 percent increase over a year ago.

But that’s just the beginning of the bad news. Repossessions and REOs are up two percent over April DESPITE the existence of moratoria in several large states including California, Ohio and Illinois. California’s moratorium which was criticized by consumer groups for too many loopholes, ended on May 22. The expiration of state moratoria will produce a spike in REO activity in the months to come.

The next bad news is geographic. REOs were up 2 percent thanks largely to substantial increases in several states, including Michigan, Arizona, Washington, Nevada, Oregon and New York. This may be another sign that foreclosures caused by layoffs and the general economic crisis is surpassing foreclosures resulting from subprime, option ARM and other alternative loans as the leading cause of foreclosures. Only two these states, Nevada and Arizona, were leasing sites of subprime and opt A defaults. Michigan, New York, Washington and Oregon’s rising REO rates is more likely a function of lay offs.

The problem with these Good Old Fashioned Foreclosures (GOOFFs) is that they are impervious to the payment reduction strategy Sheila Bair incorporated in the Administration’s loan modification program. Only economic recovery will stop GOOFS. For more on this point, see Delinquencies: Trading One Nightmare for Another.

The last bit of bad news is the fact that it’s nearly six months since President Obama took office and five months since he announced his plan February 12 in Phoenix. To date, it has had no discernable impact on foreclosure rates; rather, they are soaring out of control at a double digit clip. It now looks as though the foreclosure plague that is ravaging real estate markets will continue unabated for at least another year. Real estate recovery cannot take place until foreclosures are under control.

U.S. Foreclosure Market Data by State – May 2009

Properties with Foreclosure Filings

Rate Rank

State Name

NOD

LIS

NTS

NFS

REO

Total

1/every X HH (rate)

%Change from Apr 09

%Change from May 08

U.S.

55,442

67,687

100,578

32,756

65,017

321,480

398

-6.01

17.76

30

Alabama

1

0

1,567

0

399

1,967

1,086

-14.77

292.61*

35

Alaska

6

0

132

0

53

191

1,478

-19.07

11.70

4

Arizona

9

0

12,103

0

4,753

16,865

158

3.82

31.04

22

Arkansas

126

0

1,169

0

376

1,671

770

-10.35

25.92

2

California

43,294

0

35,900

0

13,055

92,249

144

-4.46

22.81

8

Colorado

4

0

3,708

0

1,164

4,876

436

-11.26

-14.98

33

Connecticut

0

778

0

91

237

1,106

1,301

-49.13

-32.15

28

Delaware

0

0

0

328

58

386

1,007

107.53

45.66

District of Columbia

77

0

187

0

35

299

951

-24.87

-23.53

3

Florida

0

39,523

0

13,363

6,045

58,931

148

-8.76

50.40

7

Georgia

1

0

6,883

0

3,632

10,516

377

-8.72

-1.27

15

Hawaii

279

0

476

0

61

816

621

19.30

397.56

9

Idaho

886

0

496

0

62

1,444

437

-41.73

72.32

11

Illinois

0

3,139

0

4,827

2,976

10,942

479

-19.82

9.50

13

Indiana

0

1,784

0

2,033

1,141

4,958

560

-1.22

-0.04

41

Iowa

0

0

237

0

398

635

2,094

0.63

42.70

34

Kansas

0

177

0

399

323

899

1,356

14.23

31.24

38

Kentucky

0

295

0

579

204

1,078

1,768

20.99

43.73*

40

Louisiana

0

4

0

748

189

941

1,976

-16.36

34.24

42

Maine

0

65

0

231

29

325

2,143

31.05

34.30

17

Maryland

0

2,737

0

314

488

3,539

655

-2.05

50.92

20

Massachusetts

0

2,278

0

755

588

3,621

752

-31.09

-45.48

6

Michigan

0

0

7,645

0

6,246

13,891

326

28.26

-4.72

23

Minnesota

6

0

1,857

0

1,086

2,949

781

-16.86

22.47

43

Mississippi

0

0

409

0

25

434

2,891

29.55

134.59

26

Missouri

1

0

1,835

0

960

2,796

947

3.63

-43.96†

48

Montana

0

0

1

0

36

37

11,771

-39.34

-73.19

45

Nebraska

0

146

0

2

21

169

4,620

43.22

-48.79

1

Nevada

8,876

0

5,230

0

3,051

17,157

64

5.48

82.70

25

New Hampshire

0

0

613

0

114

727

817

-29.76

6.44

24

New Jersey

0

2,793

0

1,095

520

4,408

794

-12.44

-41.44

Source: RealtyTrac

3 comments

  1. Hey, nice post, very well written. You should blog more about this.

  2. Hey, nice post, very well written. You should post more about this. I’ll certainly be subscribing.

  3. Note there were also 2 fewer recording days in May than in April, negating the drop and making the actual daily average recordings flat for the month.

    Best regards,
    Sean

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