According to California-based real estate data company RealtyTrac, a record 2.8 million properties received a foreclosure notice in 2009. By comparison, roughly 2.3 million properties with a mortgage got a foreclosure notice in 2008.
The record is made even more disconcerting considering a plethora of federal initiatives and lender modifications aimed at keeping people in their homes. Many lenders worked with distressed mortgage holders to modify terms of loans, but for the most part were unwilling to reduce principal balances. Until that happens, RealtyTrac believes high redefault rates will continue as long as the consumer is under pressure. That is part of why foreclosures hit an all-time high in 2009, and RealtyTrac projects they will do so again in 2010.
RealtyTrac noted that the rate of loan failure would have been even higher without government aid programs, in addition to if lenders were able to expediently process the huge volume of those in default.
On the bright side, the rate of foreclosure notices being served in the final 3 months of the 2009 slowed 7% quarter-over-quarter. Still, stagnant employment and wages dogs hopes that the real estate market can self correct.
The problem remains largely a regional one (with Nevada, Arizona, Florida, and California comprising the bulk of properties who received foreclosure notices). More than 918,000 properties were repossessed by banks in 2009, another record. That's a lot of assets on bank balance sheets that they don't want, and could be very good news for the REO market.
