Foreclosures rise 68% in past year, but drop 10% in November

Posted Dec 19th 2007 10:20AM by Joseph Lazzaro
Filed under: Other Issues, Economic Data, Housing

Home foreclosure rose 68% in the past 12 months, but declined 10% in November from the previous month, according to date compiled by RealtyTrac, Reuters reported.

Lenders filed 201,950 foreclosure filings in November, for a foreclosure rate of 1 in 617 households.. October's decline follows 2% gains in October 2007 and September 2007, respectively, according to RealtyTrac, Reuters said. The 201,950 foreclosure filed in November 2007 contrasts with 120,334 filed in November 2006, Realty Trac said, The Associated Press reported.

Economist David H. Wang told BloggingStocks Wednesday that investors should not take away from October's monthly decline that foreclosures are trending downward, or that the housing slump is nearing an end.

"It's always good to see a decline in foreclosures, but keep in mind that this is only one month. The market would need to see declines for 3, 4, 5 months before we can begin to state that foreclosures are heading lower," Wang said. "More than likely, with many more resets ahead, the foreclosure statistic is likely to rise."

A focus on 2008

Analysts estimate that another $500-$550 billion in adjustable rate mortgages are due to reset in 2008.

Some economists have pointed to mid/late 2008 as a pivotal period for the housing sector, as the nation will witness not only the second-wave of variable interest rate resets, but also, the engagement of Bush Administration's subprime mortgage-assistance program, and possibly additional assistance reform programs, assuming they are enacted, as expected.

"Mid-2008 is critical because by then we'll know more about the major mortgage assistance programs, how well they've addressed at-risk mortgages, and the market's interpretation of the reforms," Wang said. "What the market will want to see is more performing mortgages, a reduction in homes for sale, and a general improvement in credit conditions. So, the foreclosure statistics as we head into the spring will help us get a read on all of that."

Tags: adjustable rate mortgages, ARMs, bond market, credit markets, economy, foreclosures, housing, inthenews, mortgage foreclosures, mortgages, subprime, subprime mortgages, U.S. economy