Home Foreclosures Remain High into Summer 2009

February 23, 2017

No End in Sight for Home Foreclosures

Although 2009 opened on a hopeful note, with home foreclosure rates down 10% from December levels, by mid-year it has become obvious that federal programs like “Making Homes Affordable” and other stimulus efforts have not been able to overcome the devastating effects of an unemployment rate climbing toward 10% nationally. Initially, foreclosures were hitting people who had over-extended themselves. California, for instance, was home to 34% of all foreclosure activity in 2008 because there, the median home value exceeded the median family income 8.3 times. Now, however, Americans who have lost their jobs, seen their credit potential shrink to nothing, and their savings evaporate are the ones losing their homes in growing numbers. By May 2009, figures placed 1 in every 398 homes in America in foreclosure proceedings.

May was a telling month for assessing the existing foreclosure climate. It was the third month in a row when foreclosures exceeded a record-breaking 300,000, standing at 321,480 homes, up 18% from the May 2008 levels. The areas hardest hit in 2008 — Arizona, California, Florida, and Nevada — which accounted for 62% of all foreclosures in 2008 — remained hotspots. In May 2009, Arizona reported 16,865 filings; Florida 58,931; California 92,249; and Nevada 17,157.

By June, the Office of the Comptroller of the Currency reported foreclosures in progress up 22% for the first quarter of 2009 at 844,389, a jump of 73% over first quarter 2008. In the Phoenix area real estate market, a region comprised of five major communities, the numbers were grim, with Maricopa showing 305 foreclosures; Queen Creek 517; Glendale 587; Phoenix proper 2,882; and Mesa 925. While the same report pointed out the loan modifications for the same period were up 55%, it was obvious that the program to re-work existing mortgages and keep Americans in their homes had not done enough to stem the foreclosure tide.

The fact that the rates remained high into summer 2009 illustrates that fairly dramatic actions, like Fannie Mae and Freddie Mac imposing a moratorium on all foreclosure sales through the end of January and Florida imposing a 45-day freeze on such actions in December 2008 simply had not been enough. The most troubled areas all represented former home building and real estate hot spots, places where it seemed the prosperity would never end; but when it did end, it ended in a big way. By early July, more and more economic analysts began to call for a second federal stimulus program to stop the hemorrhage of home ownership.

While these same analysts agree that the economy is no longer tumbling headlong down the chute to further disaster, it is wedged in a stagnant position. Consumer confidence remains low, with mortgage applications dropping in proportion to the rise in foreclosures. Home ownership is just too frightening for Americans facing growing job losses, the evaporation of both benefits and their life savings, and a Dow that is stubbornly refusing to climb above 8,500 points — a fact that is keeping investors wary of pumping money into a real recovery. The home crisis in America is far from over and unfortunately, foreclosures rates have not improved appreciably over the frightening 2008 numbers.