Connecticut’s foreclosure filings declined between June and July, but the number is still up for the year so far and is approximately 100 percent higher than the July 2006 filings.Nationally, the number of foreclosure filings last month jumped 93 percent from July 2006 and rose 9 percent from June, the latest sign homeowners are having trouble making payments and finding buyers during the national housing downturn.
There were 179,599 foreclosure filings nationally reported during July, up from 92,845 during the same period a year ago, Irvine, Calif.-based RealtyTrac Inc. said Tuesday. There were 164,644 foreclosure filings reported in June.
According to RealtyTrac, there were 2,118 foreclosure filings in Connecticut in July, down from 2,386 in June but more than double the 1,038 in July 2006. In July 2005, there were 563 foreclosure filings.
In July 2007, New Haven County had the highest number of filings, at 706, followed by Hartford County at 450 and Fairfield County at 403.
While New Haven County edged up between June and July, Fairfield and Hartford counties reported fewer foreclosures.
“It’s still up on a year-over-year basis,” said RealtyTrac spokesman Daren Blomquist of Connecticut’s foreclosure rate.
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The national foreclosure rate in July was one filing for every 693 households, the company said. For Connecticut, that figure was one for every 672 households.
In the July report, Nevada, Georgia and Michigan accounted for the highest foreclosure rates nationwide. Connecticut ranked 11th in foreclosures.
“While 43 states experienced year-over-year increases in foreclosure activity, just five states — California, Florida, Michigan, Ohio and Georgia — accounted for more than half of the nation’s total foreclosure filings,” RealtyTrac chief executive James J. Saccacio said.
The filings include default notices, auction sale notices and bank repossessions. Some properties included in the survey might have received more than one notice, if the owners have multiple mortgages.
RealtyTrac, which describes itself as an “online real estate marketplace,” bases its reports on public records. Its subscribers include people wishing to invest in real estate, Blomquist said.
The company has been publishing foreclosure reports since January 2005, he said, but “there’s definitely been an uptick in interest in the last few months” as the mortgage industry is buffeted by failures in its subprime sector.
In recent months, the mortgage industry has been battered by rising defaults and foreclosures, primarily driven by borrowers with subprime loans and adjustable-rate mortgages.
Lagging home sales and flat or decreasing home prices have made it more difficult for homeowners who fall behind on payments to sell their homes and clear the debt, spurring the rise in foreclosure activity.
The type of loans seeing higher delinquencies and defaults in general are home equity loans or second mortgages used to cover a down payment; subprime loans to people with shaky credit histories; and Alt-A loans, which can include interest-only and adjustable-rate mortgages sold with little or no documentation.
Blomquist said about half of the recent foreclosures would have been considered as subprime loans. This when the overall rate of subprime loans is about 15 to 20 percent of all loans, he added.
In states like California and Florida, the rapid rise of home prices is the main reason for the foreclosures; in states such as Michigan and Ohio, the underlying economy, such as the loss of jobs, is the main driver, Blomquist said.
His impression is Connecticut’s relatively high foreclosure rate is related to its cost of housing.
“That’s a huge factor, affordability,” he said.
“We are seeing more foreclosures overall,” said Norm Krayem, president of the Connecticut Association of Realtors. He blames predatory lending as well as high prices.
He bases this on the timing of the foreclosures. Many people who took advantage of creative financing to buy homes with variable rates didn’t know the rates would reset so soon.
“They’re actually one-year variables,” instead of the three- or five-year variable rates homeowners thought they were getting. Some rates on second mortgages, used instead of a downpayment by some borrowers, jumped 2 percent in six months, he added.
A slowing in price appreciation is also hurting new homeowners, Krayem said, because “you would owe more than your house could bring today.”
Except in Fairfield County, where prices are generally up 10 percent, Krayem said last year’s buyer who only put 5 percent down likely wouldn’t have any equity in his home if he needed to sell today.
The foreclosure rate doesn’t appear to be slowing, Blomquist said, and RealtyTrac anticipates it could continue to accelerate nationally into 2008.
But for Connecticut, Krayem is more optimistic, because the state’s economic underpinnings — no recession and low unemployment — are good.
“Home prices needed to come down and they have,” Krayem said.
The Associated Press contributed to this report.
By Pam Dawkins, News-Times Media