Once again, due to uncooperativeness from banks, the national U.S. foreclosure rate has skyrocketed, deteriorating to record levels not previously seen in America.

Some were encouraged by a slight rise in national home sales, but it is being fuelled by homes being sold at rock bottom prices ($10,000 to $50,000) drastically dropping neighborhood property values.

It would have been better had banks kept homeowners in their homes, which contained higher property values on state tax rolls, than rush them out via foreclosure, to sell the property at less than 50-90 percent of its value.  

U.S. Foreclosure Filings Set Third Record-High in Five Months

Aug. 13 (Bloomberg) -- Foreclosure filings in the U.S. climbed to a record for the third time in five months in July as falling home prices and the recession left more homeowners unable to keep up payments or refinance.

A total of 360,149 properties received a default or auction notice or were seized last month, according to data seller RealtyTrac Inc. One in 355 households got a filing, the highest monthly rate in RealtyTrac records dating to January 2005, the Irvine, California-based company said in a statement.

“We’re in a deep hole,” Diane Swonk, chief economist at Chicago-based Mesirow Financial Inc., said in an interview. “There is a whole new wave of foreclosures tied to the cyclical dynamics of the economy.”

Foreclosures increased as the U.S. recorded another 247,000 job losses in July and home prices fell, leaving an increasing number of mortgage holders owing more than their properties were worth. The median price of an existing single-family house dropped 15.6 percent to $174,100 in the second quarter, the most in records dating to 1979, the National Association of Realtors said yesterday. Almost one-quarter of U.S. mortgage holders are underwater, property data firm Zillow.com said Aug. 11...

Loan Modifications

About 235,000 troubled borrowers have begun modifying their property loans under the government’s Making Home Affordable Program, compared with a target population of 4 million, according to an Aug. 4 Treasury Department report. About 15 percent of eligible borrowers were offered loan modifications and 9 percent entered trial agreements.

Bank of America Corp. modified about 4 percent of its qualifying loans and Wells Fargo & Co. changed 6 percent, making them the two worst performers in the program among the biggest U.S. banks, Treasury said. Citigroup Inc. modified 15 percent of its eligible loans and JPMorgan Chase & Co. changed 20 percent.

“It has been more profitable to put a home in foreclosure than restructure the loan,” Swonk said. “The only thing that helps is forgiveness of principal, and there is little willingness to do that.”

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