Foreclosure filings declined 3% in June but were still 51% higher than the level recorded a year earlier, according to RealtyTrac.

The company’s U.S. Foreclosure Market Report indicates that foreclosure of 252,363 filings that consist of default notices, auction sale notices, and bank repossessions, were reported in June.

“June was the second straight month with more than a quarter million properties nationwide receiving foreclosure filings,” said James J. Saccacio, RealtyTrac’s chief executive officer.

“Foreclosure activity slipped 3% lower from the previous month, but the year over year increase of more than 50% indicates we have not yet reached the top of this foreclosure cycle”.

Bank repossessions continued to increase much faster than default notices or auction notices in June, he said.

The company reported that Nevada, California, and Arizona again recorded the highest foreclosure rates in June.

New foreclosure filings rose 4% in April and were nearly 65% higher than the level recorded a year earlier, according to RealtyTrac.

The company’s U.S. Foreclosure Market Report indicates that foreclosure filings, default notices, auction sale notices, and bank repossessions were reported on 243,353 properties in April.

"The total number of U.S. properties with foreclosure activity in April was the highest monthly total we’ve seen since we began issuing the report in January 2005," said James J. Saccacio, RealtyTrac’s chief executive officer. "Although only about 2% of households nationwide are in foreclosure, these properties contribute to already-bloated inventories of homes for sale and put downward pressure on home values."

The company noted California, Florida, and Ohio recorded the highest foreclosure rates in April.

The largest subprime mortgage servicers should be able to move ahead with loan modifications now that they have worked through most of the problems associated with the requirements of the mortgage backed securities contracts, according to Iowa Attorney General Tom Miller.

“They feel they have the discretion and authority needed to make loan modifications where those modifications benefit the investor and homeowner,” Mr. Miller told the House Financial Services Committee.

“Upwards of 95% of the pooling and servicing agreements do not pose significant constraints, according to the servicers we have met with.” Mr. Miller heads up a working group of state AGs and banking regulators that met with the 10 largest subprime servicers in September and plans to meet the 10 next biggest servicers during the week of Nov. 5.

He noted, however, that piggyback 80/20 loans are a problem because the first and second loans are in separate securitizations with different investors and servicers.

Residential properties that are in some state of foreclosure rose 30% in the third quarter and doubled on a year over year basis, to 446,726 units, according to new figures released by RealtyTrac.

Nevada had the highest foreclosure rate in the nation, with one filing for every 61 households.

After Nevada, California (one for every 88 households) and Florida (one for every 95) had the highest incidence of foreclosures.

California, though, saw its foreclosure filings quadruple to 148,147 incidences from those of a year earlier.

Other states ranking among the top 10 in foreclosures include Michigan, Ohio, Colorado, Arizona, Georgia, Indiana, and Texas.

A properly designed bankruptcy bill with firm guidance for modifying loans could reduce the number of expected foreclosures by 500,000, Mark Zandi, chief economist of Moody’s Economy.com, has told a congressional panel.

Mr. Zandi warned that 2 million families could lose their home by early 2009 and that the current cycle of rising foreclosures and falling housing prices could lead to a national recession.

“There is no more efficacious way to short circuit this cycle than by adopting legislation to allow bankruptcy judges the authority to modify first mortgages by treating them as secured only up to the market value of the property,” he testified.

This program is currently being accomplished without legislation AND you do NOT have to go bankrupt! If you would like more information - see Foreclosure Prevention.

He suggested that this legislation should sunset after three years so Congress can review its impact. But he dismissed claims by the Mortgage Bankers Association that such a bankruptcy bill would force lenders to increase mortgage rates and fees.

The founder of Economy.com testified that current voluntary efforts by mortgage servicers to modify loans is unlikely to stop the increase in foreclosures.

New Developments in the Running Horse Sagain Fresno California. Donald Trump’s attorney is in Fresno talking with local realtors and lenders about the project.

Two million subprime mortgage foreclosures are likely to occur by 2009 if home prices continue their downward spiral, a congressional report said Thursday.

The report also estimated that $71 billion in housing wealth will be destroyed and states will lose $917 million in property tax revenue because of foreclosures.

The report was released by Joint Economic Committee Chairman Sen. Charles Schumer, D-N.Y., and other lawmakers. “State by state, the economic costs from the subprime debacle are shockingly high,” Schumer said in a statement.

“From New York to California, we are headed for billions in lost wealth, property values and tax revenues.” Schumer, along with Sen. Amy Klobuchar, D-Minn., Sen. Sherrod Brown, D-Ohio, and others called on the White House to beef up foreclosure prevention counseling, to let Fannie Mae buy more mortgages and to encourage loan servicers to work out modifications with borrowers.

Before the report was released, the Commerce Department said sales new home sales rebounded in September from summer sales levels that were much weaker than previously reported.

Sales increased 4.8% to a seasonally adjusted annual rate of 770,000 from a revised 735,000 in August. Previously, Augusts’ sales had been reported at a 795,000 pace. The three previous months were revised sharply lower. Last month, the latest Case Shiller home price index showed that U.S. home prices in major cities are falling at their fastest rate in 16 years.

House Democrat and Financial Services Committee Chairman Barney Frank, has drafted a bill that temporarily increases the caps on Fannie Mae’s and Freddie Mac’s portfolios for six months so the two mortgage giants can purchase modified or refinanced subprime loans.

The bill would increase the caps on the companies’ $700 billion portfolios by 10%, but 85% of any mortgages purchased must benefit struggling subprime borrowers.

“The six month/85% bill that I am filing seems to me responsive to the immediate needs to help people avoid foreclosure,” Rep. Frank said. The House committee chairman is also preparing to introduce a bill aimed at stopping abusive lending practices.