Despite recent positive economic news, home foreclosures remain high around the country.Analysis conducted by RealtyTrac, a Web site that complies foreclosure data, suggests that more than one percent, or about 1.5 million properties, reported a foreclosure filing during the first two quarters of 2009. The high numbers are probably a function of ongoing unemployment and the loss of equity that many homeowners have experienced.
As the national unemployment rate approaches 10 percent and is already considerably higher in other parts of the country, more and more people are struggling to pay their mortgages. Savings and emergency funds have dwindled and jobless benefits are winding down which makes it harder to stay current. Decreases in home equity have also caused more homeowners to become "upside down" on their mortgages, meaning that they owe more than the home is worth.
A mortgage that is greater than the equity in a home can push more properties into foreclosure because the owners have less of an incentive to continue to pay. Selling the home becomes very difficult in these situations because prices are often depressed and the owners would take a loss.
Washington has shown support for President Obama's plan to ease foreclosure rates, but some lenders have been slow to modify their customers' loans. Faced with a high volume of requests and a level of reluctance to modify loans on the part of some mortgage companies, foreclosures remain high.
Soon after employment levels rise and the market begins to satisfy pent up demand for housing, real estate prices should rise and foreclosure rates should drop considerably.
--Bridget O'Sullivan
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