Us ravaged by repo woe

May was a devastating month for US homeowners as the credit crunch renewed its stranglehold…

According to a report by RealtyTrac Inc, US banks repossessed twice as many homes in May and foreclosure filings rose 48 percent from a year ago as falling house prices trapped borrowers in mortgages they couldn't afford.

The report revealed that one in every 483 U.S. households either lost the home to foreclosure, received a default notice or was warned of a pending auction. That was the highest rate since the Irvine, California-based company began reporting in January 2005 and the 29th consecutive month of year-over-year increases. Nevada, California and Arizona posted the highest rates in the U.S. and New Jersey entered the top 10.

Lenders ‘afraid’

Rick Sharga, RealtyTrac's vice president of marketing, commented: `Right now, lenders are afraid to lend and buyers are afraid they'll be under water in a year, so unless something dramatic happens we're going to continue to see the trend go in the wrong direction”.

The percentage of total outstanding U.S. homes in some stage of foreclosure in the first quarter was 2.47, according to Mortgage Bankers Association. The average over the last 30 years has been 0.98 percent, but RealtyTrac's numbers reflect new filings.

A homeowner usually receives a notice of default after falling more than 90 days behind on mortgage payments. If the borrower still doesn't pay what's owed, the property is sold to the highest bidder at an auction, typically held at a county courthouse. If bids don't reach a set amount, the lender takes ownership. Such houses are referred to as REO, or ``real estate- owned.''

The main findings of the report were as follows:

- One in every 201 Arizona households received a filing in May -- a 119 percent increase compared with May 2007 and ranked third in the U.S.

- Only Nevada, with one in every 118 households, and California, with one in every 183, had higher filing rates in May.

- One in every 467 New Jersey households received a foreclosure filing in May, making it No. 10 on RealtyTrac's list of states. That represented an 89 percent increase from a year ago and a 44 percent increase from April.

- Other states in the top 10 were Florida, Ohio, Michigan, Georgia, Texas and Illinois.

- The number of national foreclosure filings grew 7 percent from April.

- The nationwide rate of default warnings in May increased 1 percent from April and the number of auction notices fell 3 percent.

- Metropolitan areas in California and Florida accounted for nine out of the top 10 metro foreclosure rates for the second month in a row.

- Seven California metro areas were in the top 10: Stockton, Merced, Modesto, Riverside-San Bernardino, Vallejo-Fairfield, Bakersfield and Sacramento. Stockton's rate, one in every 75 households, was more than six times the national average, the company said.

- The only city outside Florida and California in the top 10 was Las Vegas.