RealEstateEconomyWatch.com

As expected, foreclosures broke records by wide margins in 2009, with 2.8 million foreclosures being filed, an increase of 21 percent over 2008 and 120 percent over 2007, according to RealtyTrac’s year-end report.

However, so many properties are in the pipeline that huge numbers of delinquent properties won’t come to market until this year or later.  The “hangover” of foreclosures also is expected to set a record and will be felt in real estate markets at least through the second quarter.  “In the long term a massive supply of delinquent loans continues to loom over the housing market, and many of those delinquencies will end up in the foreclosure process in 2010 and beyond as lenders gradually work their way through the backlog,”  said James J. Saccacio, chief executive officer of RealtyTrac.

In fact, the delay in processing foreclosures due to loan modification programs, moratoria and a system overwhelmed by the sheer volume of properties was the only reason the number of 2009 foreclosures was not greater.

“As bad as the 2009 numbers are, they probably would have been worse if not for legislative and industry-related delays in processing delinquent loans After peaking in July with over 361,000 homes receiving a foreclosure notice, we saw four straight monthly decreases driven primarily by short-term factors: trial loan modifications, state legislation extending the foreclosure process and an overwhelming volume of inventory clogging the foreclosure pipeline.

“Despite all the delays, foreclosure activity still hit a record high for our report in 2009, capped off by a substantial increase in December,” said Saccacio.

Foreclosure filings were reported on 349,519 U.S. properties in December, a 14 percent jump from the previous month and a 15 percent increase from December 2008 - when a similar monthly jump in foreclosure activity occurred. Despite the increase in December, foreclosure activity in the fourth quarter decreased 7 percent from the third quarter, although it was still up 18 percent from the fourth quarter of 2008.

More than 10 percent of Nevada housing units received at least one foreclosure filing in 2009, giving it the nation’s highest state foreclosure rate for the third consecutive year. Nevada foreclosure activity in December increased 27 percent from the previous month but was still down 22 percent from December 2008. Fourth quarter foreclosure activity in Nevada was down 37 percent from the previous quarter thanks to substantial decreases in October and November.

Arizona registered the nation’s second highest state foreclosure rate in 2009, with more than 6 percent of its housing units receiving at least one foreclosure filing during the year, and Florida registered the nation’s third highest foreclosure rate, with 5.93 percent of its housing units receiving at least one foreclosure filing during the year.

Other states with 2009 foreclosure rates ranking among the nation’s 10 highest were California (4.75 percent), Utah (2.93 percent), Idaho (2.72 percent), Georgia (2.68 percent), Michigan (2.61 percent), Illinois (2.50 percent), and Colorado (2.37 percent).