Foreclosures jump 60% in February
Frank drafts proposal to aid those on brink
NEW YORK - US home foreclosure filings jumped 60 percent and bank seizures more than doubled in February as rates on adjustable mortgages rose and property owners were unable to sell or refinance amid falling prices.
More than 223,500 properties were in some stage of default, or 1 in every 557 households, according to Irvine, Calif.-based RealtyTrac Inc., a seller of foreclosure data. Nevada, California, and Florida had the highest rates.
"With declining prices, there is a pervasive problem of not being able to refinance or sell," said Susan Wachter, professor of real estate at the University of Pennsylvania's Wharton School in Philadelphia.
About $460 billion of adjustable-rate mortgages are scheduled to reset this year and another $420 billion will rise in 2011, according to analysts at Citigroup Inc. Homeowners faced higher payments as fourth-quarter home prices fell 8.9 percent, the biggest drop in 20 years as measured by the S&P/Case-Shiller home price index.
Foreclosure filings are likely to be "explosive" in May and June as more payments jump, after holding at current levels this month and next, Rick Sharga, executive vice president of RealtyTrac, said. There may be between 750,000 and 1 million bank repossessions in 2008. Bank seizures rose 110 percent in February from a year ago, he said.
February was the 26th consecutive month of year-on-year monthly foreclosure increases, Sharga said. Total filings fell 4 percent last month from the previous month, said RealtyTrac, which compiles statistics from a database of more than 1 million properties and monitors default notices, auction sale notices, and bank repossessions.
US House Financial Services Committee chairman Barney Frank yesterday unveiled legislation to expand the federal government's role in shielding people in danger of losing their homes.
His proposal would allow the Federal Housing Administration to insure and guarantee refinanced mortgages after lenders and loan holders reduce principal to a level borrowers can repay, according to a draft of the legislation.
