Foreclosures rocketed 70% in third quarter

In another sign that the housing turmoil continues to deepen, foreclosure activity surged more than 70% in the third quarter from the same period a year ago, according to the latest data from RealtyTrac of Irvine, Calif. The report shows the number of properties subject to foreclosure filings, which include default notices, auction sale letters and bank repossessions, rose to 765,558 in the third quarter, up 3% from the second quarter and 71% from a year earlier. However, during the month of September, foreclosure activity slowed slightly. Foreclosure filings were reported on 265,968 properties in September, which is down 12% from August, but still up 21% from September 2007. This equates to about one in every 475 homes receiving a foreclosure notice in September. “Much of the 12% decrease in September can be attributed to changes in state laws that have at least temporarily slowed down the pace at which lenders are moving forward with foreclosures,” James Saccacio, chief executive of RealtyTrac, said in a statement. He cited California’s Bill 1137 and new legislation in North Carolina for helping to slow the process. Under California’s Bill 1137, lenders must contact homeowners prior to filing a foreclosure notice, to ensure the homeowners are aware of all of their options, and then wait 30 days. The legislation is aimed at encouraging lenders to make loan modifications rather than foreclose on properties. However, it doesn’t force lenders to modify loans. The bill caused filings to plummet 51% in California in September from the previous month. In North Carolina, similar legislation requiring a 45-day waiting period took effect, causing filings to fall 66% in that state in September. However, foreclosure filings jumped 465% in Massachusetts between August and September. That state had seen a sharp pullback in filings in June, July and August after it had brought in legislation requiring a 90-day waiting period. “But in September, about 90 days after the law took effect, initial foreclosure notices jumped back up close to the level we were seeing earlier in the year,” Mr. Saccacio said in the statement. Nevada continues to lead the country with the highest state foreclosure rate in September, as foreclosure filings were reported on 13,022 properties, up 137% from a year ago. This means about one in every 82 units were in foreclosure in September — more than five times the national average. Florida posted the second highest foreclosure rate, with one in every 178 homes receiving foreclosure filings. California ranked third, with one in every 189 homes receiving a foreclosure notice.