U.S. foreclosure rate continues upward

SANTA BARBARA
October 9, 2006 5:19am

Foreclosure activity in the third quarter of 2006 climbed approximately 14 percent compared to the second quarter, according to Bargain Network of Santa Barbara, an online seller of real estate foreclosure, pre-foreclosure and for-sale-by-owner properties and information.

This also marks a 39 percent increase in foreclosure activity compared to the same quarter last year, according to the company.

Foreclosure activity last month remained relatively strong with an estimated 103,000 properties entering some stage of the foreclosure process during the 30-day period nationwide, it says.

The September figure is dip of about 10 percent in foreclosure activity compared with August, it says. But it’s also a 51 percent increase in foreclosure activity compared to September 2005, according to the figures compiled by Bargain Network.

September figures, along with figures from the third quarter, show one new property entering some stage of the foreclosure process for every 1,122 U.S. households, it says.

Five states -- Florida, California, Michigan, Texas and Colorado -- accounted for an estimated 66 percent of September's foreclosure filing activity.

Florida represented the state with the nation's highest foreclosure activity with approximately 28,000 properties entering some stage of the foreclosure process, accounting for 27 percent of the overall nationwide foreclosure activity, the company says. With 1 new foreclosure filing for every 254 households, the state's foreclosure rate was over 4 times the national average.

California ranked second with approximately 17,000 foreclosures entering some stage of the foreclosure process, or 1 foreclosure for every 712 households in the state. The state's foreclosure activity represents a 37 percent increase from the previous month, and a 44 percent increase in Q3 compared with Q2, according to the company’s figures.

"Florida and the western states are known for their predominance of negative amortization loans in which mortgage holders pay only interest, not equity on their properties," says Tom Adams, president and CEO of Santa Barbara-based Bargain Network. "We anticipate that foreclosure rates will stabilize, and that foreclosures will continue to be an attractive investment vehicle as a cooling economy and slower housing market force some people who purchased real estate using sub-prime mortgages to default on those loans in the months ahead."

Bargain Network says its figures are based on its analysis of proprietary data from a variety of independent, proprietary and public sources.