Bay area foreclosure filings ease, but may surge

Foreclosure filings in the Tampa Bay area peaked in August at 5,904 and slowly eased to 3,837 last month.

But brace yourself for a possible wave of mortgage defaults as early as this summer. A huge number of adjustable-rate loans — those made during the housing boom in 2005 — reset with higher interest rates in June.

That could cause an uptick in foreclosures in the second half of the year, a surge that could burden a real estate market already stressed by slow sales and falling prices, according to the firm RealtyTrac.

"Once we're through that batch of loans, the worst will have been worked through the system," said Rick Sharga, RealtyTrac's vice president of marketing.

The number of U.S. homes receiving at least one foreclosure filing jumped 57 percent in March to 234,685, compared with 149,150 properties a year earlier. Filings include default notices, auction sale notices and bank repossessions.

Over the same year, foreclosure filings in the Tampa Bay area swelled 92.7 percent, to 3,837 in March 2008 from 1,991 in March 2007.

Of those nearly 4,000 filings, 1,100 had advanced to the point that banks were auctioning off or repossessing the homes.

The Federal Deposit Insurance Corp. estimates that 1.7-million subprime loans worth $367-billion will reset during 2008 and 2009. Many came with rates fixed for three years before they reset, meaning the loans are attached to homes bought in 2005 and 2006.

Without loan modifications by banks — typically easing home­owners into affordable fixed rate loans — 1.4-million of those loans could become problems, the FDIC said.

"We're not near the bottom of this at all,'' said Kenneth Rosen, chairman of the Fisher Center for Real Estate at the University of California at Berkeley. "The foreclosure process will accelerate throughout the year."

U.S. home price declines will probably double to a national average of 20 percent by next year, with lower values likely in states like Florida and California, mortgage insurer PMI Group Inc. said last week. PMI ranked the Tampa Bay area as the ninth riskiest for home price declines.

Lower home prices and stricter lending standards have made foreclosures worse. Many homeowners stuck in unmanageable mortgages can't sell or refinance. Handing over the keys to the bank is often the only option.

RealtyTrac said banks repossessed 51,393 properties nationwide the past year. It estimates between 750,000 and 1-million bank-owned properties will hit the market this year, or about a quarter of the homes up for sale.

Nevada clocked in the worst foreclosure rate for the 15th straight month. Last month, one in every 139 households received a foreclosure-related notice, nearly four times the national rate.

California had the second-highest rate. One in every 204 California households received a foreclosure-related notice. California had 64,711 properties facing foreclosure, the most of any state.

In Florida, 30,254 homes reported at least one filing, down nearly 7 percent from February, but up 112 percent from the year before. In the Tampa Bay area, foreclosures affected one out of 337 households.

Rounding out the states with the highest foreclosure rates were Arizona, Colorado, Georgia, Ohio, Michigan, Massachusetts and Maryland.

Times wires contributed to this report. James Thorner can be reached at thorner@sptimes.com.

Bay area foreclosure filings ease, but may surge 04/15/08 [Last modified: Thursday, April 17, 2008 10:32am]

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