Friday, July 25, 2008
U.S. foreclosure filings more than doubled in the second quarter from a year earlier as falling home prices left borrowers owing more on mortgages than their properties were worth.
One in every 171 households was foreclosed on, received a default notice or was warned of a pending auction. That was an increase of 121 percent from a year earlier and 14 percent from the first quarter, RealtyTrac Inc. said today in a statement. Almost 740,000 properties were in some stage of foreclosure, the most since the Irvine, California-based data company began reporting in January 2005.
“Rising foreclosures are putting downward pressure on prices, increasing the possibility that homeowners will go upside- down on their mortgages,” said Sheryl King, chief U.S. economist at Merrill Lynch & Co. in New York. “That will cause more losses in mortgage portfolios and less willingness from investors to securitize mortgages and therefore fewer mortgages.”
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About 25 million U.S. homeowners risk owing more than the value of their homes, according to Bill Gross, manager of the world’s biggest bond fund at Pacific Investment Management Co. That would make it impossible for them to negotiate better loan terms or sell their property without contributing cash to the transaction.
This article was posted: Friday, July 25, 2008 at 9:57 am