"Nevada, California, Florida post top state foreclosure rates
Nevada continued to register the nation’s highest state foreclosure
rate, one foreclosure filing for every 165 households - more than three times
the national average. The state reported 6,197 foreclosure filings during the
month, a 21% increase from the previous month and more than triple the
number reported in August 2006.
California’s foreclosure rate jumped to second highest among the states
thanks to a 48% month-over-month spike in foreclosure activity. The state
reported 57,875 foreclosure filings during the month, a foreclosure rate of one
foreclosure filing for every 224 households - more than twice the national
average.
Florida foreclosure activity jumped 77% from the previous month,
boosting the state’s foreclosure rate from seventh highest to third highest
among the states. The state reported 33,932 foreclosure filings, a foreclosure
rate of one foreclosure filing for every 243 households.
Other states with foreclosure rates ranking among the nation’s 10 highest were Georgia, Ohio, Michigan, Arizona, Colorado, Texas and Indiana.
Seven of the top 10 states in terms of total foreclosure filings in
August were located in the Sun Belt, and three of the top 10 states were in the
Rust Belt. After California and Florida, Ohio registered the third highest state
total, with 17,793 foreclosure filings during the month. The state documented a
foreclosure rate of one foreclosure filing for every 281 households, fifth
highest in the nation."
Still with me? Drink some more coffee! Lets guess who published this data? Yes, that's right...a company who specializes in selling foreclosure information to lenders, banks, real estate agents, etc... Obviously, their "twist & turn" on the data is that there is doom & gloom on the horizon (after all, the Halloween season is approaching) and we have the data to help you make money...just pay us some money.
The national average for foreclosures filed (not finalized through the courts but just filed because you have not been paying your loan timely) is approximately 1 in 400 homes. Seems like a relatively small percentage to me. I would guess that the expected loan loss on mortgage loans would be pretty low relative to the bank's assets, earnings, other credit portfolios, etc...
If a home goes into foreclosure, many banks take the home into inventory and attempt to sell the home on the open market. Unless the loan was 100% loan to value, the bank should be able to re-coop much of its loan value...not all, but not a complete loss either.
When a bank has a loss from a credit card portfolio, do you believe that they are coming for the Walmart stuff you bought a month ago? The bank will take the used Dodge Caravan that has depreciated 50% in two years but think of that loan to value differential. How about a boat loan (yes, that hole in the water that you pour money in)? Even worse.
So where are the problems? Lets begin with re-evaluating 100% loan to value lending. There are times when it is appropriate, but not as many occasions as it has been used to fund home purchases. I wonder how many loans that included a 20% down payment have defaulted?
Lets limit the rhetoric in the media...the media loves these "top ten" reports. But when the data is coming from the business that is promoting foreclosure services, what data do you think we will hear? While I am at it, lets also limit the real estate folks from saying that the housing market is robust while in "reality", the real estate market is relatively flat from a value perspective and declining from a # of units sold perspective.
Your home should be your primary investment and the one asset that you need to keep maintained at good marketability standards. Rip up the credit cards (you'll be surprised how good that feels!), drop the car payments (used Toyota's and Honda's run a very long time), and get financially healthy. There will be less to fret over and you can ignore the "doom & gloomers"!
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