More houses slid into foreclosure in August, and a big spike in initial default notices suggests the mortgage crisis will get worse before it improves, according to the latest foreclosure report from RealtyTrac.
Foreclosure filings were reported on 228,098 homes in August, a 7 percent increase over the previous month. Default notices increased 33 percent since July and reached a nine-month high in August, the biggest single-month increase since August 2007. In some states, the rash of first-time default notices was even more pronounced. The number of default notices in August jumped 42% in New Jersey, 46% in Indiana and 55% in California.
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The increase is not necessarily due to homeowners’ worsening economic conditions, RealtyTrac found. Many people being defaulted on now have been in bad shape for years. The only change is that banks are finally working through their mortgage documentation problems related to the robo-signing scandal, which have gummed up their foreclosure departments for the last year.
“The big increase in new foreclosure actions may be a signal that lenders are starting to push through some of the foreclosures delayed by robo-signing and other documentation problems,” James Saccacio, RealtyTrac’s CEO, said in a press release.
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Meanwhile, long-suffering states continued to feel the pain of the mortgage crisis. Nevada had the highest foreclosure rate in the nation for the 56th consecutive month, with one in every 118 homes receiving a foreclosure filing in August. California remained at number two, with one in 226 housing units receiving a notice, or twice the national average.
And the crisis continues to hit unevenly. Five states accounted for 53% of all foreclosures last month: California, Florida, Michigan, Illinois and Georgia. Among metropolitan areas with a population of 200,000 or more, Las Vegas had it the worst, with one in every 103 homes receiving a foreclosure notice in August, more than five times the national average.
[Related article: Despite Controversy, Robo-Signing Still Going Strong]
Image: Mike Licht, NotionsCapital.com, via Flickr