US home foreclosures up by 9% in May, may be a new wave

14 June 2012 19:53  [Source: ICIS news]

WASHINGTON (ICIS)--US home foreclosures shot up by 9% in May from April, a national market monitor said on Thursday, and housing sector officials are worried that a new wave of foreclosures may be under way.

RealtyTrac, an online marketplace for foreclosed properties, said that the number of residential properties taken back by lenders in May rose to 205,990 from the April figure of 188,981.

On an annualised basis, the tracking company said, nationwide foreclosure actions in May marked the first increase after 27 consecutive months of year-on-year declines.

The May figure of nearly 206,000 foreclosures also stands as a new return to the 200,000-plus range after falling below that level for two prior months.

The May statistics “show that it’s going to be a bumpy ride down to the bottom of this foreclosure cycle”, said RealtyTrac chief executive Brandon Moore.

The jump in foreclosures last month may signal a new wave of property repossessions by banks.

In February this year, the five largest US mortgage banks concluded a $25bn (€19.75bn) agreement with multiple US state governments to settle the so-called “robo-signing” foreclosure scandal that erupted in late 2010.

At that time, major home loan lenders were foreclosing on so many homes – some 8.5m since January 2007 – that proper processes were not followed and repossessions were instituted in robot-like fashion with, in some instances, unqualified bank personnel signing documents.

Attorneys general from 49 states – the top lawyers representing respective state governments – filed suit against the five mortgage majors, ending in the $25bn settlement reached earlier this year. Most of the money has been set aside to help homeowners at risk of foreclosure make arrangements to avoid default.

But with that settlement now out of the way, banks apparently have begun to accelerate foreclosures that had been delayed until the lenders had cleaned up their processes in keeping with the settlement.

This could mean that renewed and larger flood of foreclosed properties is hitting the housing market. That in turn could cause home values, which recently have improved in some parts of the country, to go into a new slide.

With more foreclosed properties on the market and selling at heavily discounted prices, demand for new single-family homes – a key consuming sector for chemicals and resins – could decline further.

Overall US home prices fell to new lows in the first quarter this year, a situation that could be aggravated by the new flood of foreclosures.

US pending home sales also declined in April.

($1 = €0.79)

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By: Joe Kamalick
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