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Foreclosures Fall, But Little Relief for Housing Ahead

Thursday, 11 Feb 2010 | 12:24 PM ET

Foreclosure rates fell in January compared with the previous month, but remained sharply higher than a year ago, according to a new report.

Foreclosure Sign
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Foreclosure Sign

The month-to-month decrease in foreclosures is most likely a temporary improvement, said Rick Sharga, vice president of marketing at foreclosure tracking Web site RealtyTrac, which released the report.

“Because of the holiday season, offices that do the processing are closed,” said Sharga. “The drop in foreclosures [in January] is something we’ve seen a couple of years now. I don’t think this the beginning of a downward trend.”

The number of Americans receiving foreclosure notices was down 9.7 percent in January from December 2009, but 15 percent higher than last January. In all, 315,716 properties generated a foreclosure notice. That means one in every 409 homes in America received a foreclosure notice. (Foreclosure notices are defined as a default notice, bank repossession or auction sale notice.)

A separate report from real estate Web site Zillow.com released Wednesdaymight show coming trouble. The report found that one in five US mortgages were “underwater”—where homeowners owed more on their mortgage than their home was worth—during the fourth quarter. Underwater homeowners are more at risk of defaulting on their loans and going into foreclosure.

"There's a lot of foreclosures in the pipeline, and the number is going to continue to get bigger," said economist Patrick Newport at IHS Global Insight to Reuters.

The ten states with the highest foreclosure rates were little changed from the previous month. According to the RealtyTrac report, Nevada remains No. 1, with one in every 95 properties in the state getting a foreclosure notice, even though the state showed a 18 percent decrease in foreclosures from the previous year.

Arizona ranked second with one in every 129 households receiving a notice, followed by California (one in 187 households), Florida (one in 187 households) and Utah (one in every 231 households.)

South Dakota had the lowest rate, with one in every 25,820 properties receiving a foreclosure notice.

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