Businessweek Archives

Foreclosures fall 11% in the Second Quarter, Loan Applications Up


My colleague Prashant wrote recently about a second wave of foreclosures possibly headed our way in the second half of this year as banks tried to unload homes they can’t refnance. But for now at least the big wave of bank-owned properties appears to have crested. Thank moratoriums, bailouts, reforms, and negotiations that help strapped homeowners hang on to their properties, says the property information specialists at Foreclosures.com.

They say that foreclosures nationally dropped 11% in the second quarter to 205,000. Compare that to 231,000 in the first quarter of this year. “Preforeclosures”—those folks who are late on their payments and heading in the bank-owned direction— fell 10% in the second quarter to 494,078.

Even on a month over month basis things seems to be getting better. June’s foreclosure numbers reached record lows for the year. “These huge drops—double-digit in many parts of the nation—are a sigh of relief for the economy and housing markets as they bump along toward recovery,” says Alexis McGee, president of ForeclosureS.com. “Despite higher unemployment rates, industry and government stimuli are making a difference. It’s not just depressed properties that are selling anymore.”

McGee says the big surprise has been the 3% drop in new filings year to date versus 2008 in both foreclosures and preforeclosures. It’s not a huge drop, but it’s not the tidal wave of bad news some experts had been predicting.

Meanwhile people are buying more of the homes that are out there—foreclosures or otherwise. The Mortgage Bankers Association released its Weekly Mortgage Applications Survey for the week ending July 3. New loan applications increased 10.9 percent. Partly that’s due to still-low interest rates. The average rate for a 30 year fixed rate loan was 5.3%, with points of 1.13 percent.

Here is a regional breakdown of foreclosures.


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