Foreclosure Rates Surge in July

According to an article from The Huffington Post, the number of U.S. homes lost to foreclosure surged in July, as lenders take back more properties from homeowners who have been in default for months on end. 

Lenders repossessed 92,858 properties last month, up 9 percent from June and an increase of 6 percent from July 2009.

Banks have stepped up repossessions this year to clear out the backlog of bad loans.  July makes the eighth month in a row that the pace of homes lost to foreclosure has increased on an annual basis.

Still, the number of homeowners who have fallen behind on their payments remains high, and these borrowers are being allowed to stay in their homes longer.  That’s partly because lenders are reluctant to add to the glut of foreclosed homes on the market.  They also are swamped with an unprecedented number of defaulting properties and have been overwhelmed by the volume.  

The number of properties receiving an initial default notice–the first step in the foreclosure process–rose 1 percent last month, but was down 28 versus July 2009.

Economic woes, such as unemployment or reduced income, are now the main catalysts for foreclosures.