Foreclosure rates up 25% year-over-year; Arizona in top 3

[Source: Associated Press] — The number of homeowners caught in the wave of foreclosures in October grew 25 percent nationally over the same month in 2007, data released Thursday showed.  More than 279,500 U.S. homes received at least one foreclosure-related notice in October, an increase of 5 percent over September, according to RealtyTrac Inc.  One in every 452 housing units received a foreclosure filing, such as a default notice, auction sale notice or bank repossession.  More than 84,000 properties were repossessed in October, RealtyTrac said.

A nasty brew of strict lending standards, falling home values and a tough economy is filtering through the housing market.  By the end of the year, the company expects more than a million bank-owned properties to have piled up on the market, representing around a third of all properties for sale in the U.S.  The collateral damage in the financial markets forced the government to pass a $700 billion financial rescue package last month.  The plan was initially to buy bad assets from banks, but Treasury Secretary Henry Paulson said Wednesday that the rescue package won’t purchase those troubled assets.  That plan would have taken too much time, he said, so instead the Treasury will rely on buying stakes in banks and encouraging them to resume more normal lending.

Also Wednesday, Housing and Urban Development Secretary Steve Preston said the government may let more borrowers qualify for a $300 billion program designed to let troubled homeowners swap risky loans for more affordable ones.  The program was launched Oct. 1, but there are concerns that lenders won’t participate because they have to voluntarily reduce the value of a loan and take a loss.  In RealtyTrac’s report, three states — Nevada, Arizona, Florida — had the nation’s top foreclosure rates.  Nevada posted the nation’s highest rate for the 22nd consecutive month in October. [Note: To read the full article, click here.]

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