US homeowners face darker future

By Dan Levy  |   2008-12-12  |     NEWSPAPER EDITION

UNITED States foreclosure filings climbed 28 percent in November from a year earlier, and a brewing "storm" of new defaults and job losses may force 1 million homeowners from their properties next year, a default-data provider said yesterday.

A total of 259,085 properties received a default notice, were warned of a pending auction or were foreclosed on last month, according to RealtyTrac Inc. That's the fewest since June. Filings fell 7 percent from October as state laws and lender programs designed to delay the foreclosure process allowed delinquent borrowers to stay in their homes.

"We're going to see a pretty significant storm next year," Rick Sharga, executive vice president of marketing for Irvine, California-based RealtyTrac, said in an interview with Bloomberg News. "There are two or three clouds that suggest a pretty heavy downpour."

Rising unemployment, expiring foreclosure moratoriums and state efforts that "run out of steam" will push monthly filings toward the record of more than 303,000 set in August, Sharga said. The number of homes that revert to lenders, the last stage of foreclosure and known as "real estate owned" or REO properties, will increase to 1 million from as many as 880,000 this year, he said.

"The forces leading to foreclosure are hard to offset in most cases and impossible in many," said Robert Hall, a Stanford University professor and chairman of the National Bureau of Economic Research committee that calls the beginnings and ends of recessions. "Job loss is a major source of defaults at all times, and job losses are running at extreme levels now."

US companies slashed payrolls by 533,000 workers last month, the fastest pace in 34 years, for a total 1.9 million job cuts so far this year. Home prices have fallen by about a fifth from the mid-2006 peak, according to the S&P/Case-Shiller home price index.