The Mortgage Bankers Association says with home prices falling and loans harder to get, more Americans are simply giving up trying to sell their homes and are just walking away.
The trend for the future doesn't appear all that promising, either. The MBA report says the percentage of mortgages that have at least one payment overdue rose to 6.41 percent.
Real estate experts say the numbers all add up to more problems for the housing market, which shows no signs of being able to overcome the problems unleashed by subprime mortgages going bad. Falling home prices, they say, have cut off the escape route for many homeowners in over their heads, who now find they are unable to sell their homes.
Foreclosure activity increased 55 percent between July 2007 and July 2008. A recent report by RealtyTrac, an online marketplace for foreclosure properties, shows one in every 464 U.S. households received a foreclosure filing during the month. It also shows lenders were much more active last month in seizing property in default.
"Bank repossessions, or REOs, continued to be the fastest growing segment of foreclosure activity in July, posting a 184 percent year-over-year increase -- compared to a 53 percent year-over-year increase in default notices and an 11 percent year-over-year increase in auction notices," said James J. Saccacio, chief executive officer of RealtyTrac. "The sharp rise in REOs, combined with slow sales, has resulted in a bloated inventory of bank-owned properties for sale."
The emotional side of foreclosure
Homeowners have faced a growing wave of foreclosures in 2008, yet most reporting has dealt with the economic and financial implications of the collapsing housing market. But psychologists say foreclosures exact a steep emotional toll as well.
For most people, their homes are not just a place to live. Homes tie people to the community and social activities, to the familiar faces of neighbors, to friends and to a sense of belonging. Foreclosure brings with it, not only the loss of one's home, but also a myriad of emotions.
"Foreclosure means there has been a breach in financial security and that's very scary. Losing a home also brings up issues of abandonment, rejection and isolation for the entire family," said Edythe Harvey, MD, medical director of The Menninger Clinic's Hope Program. "Even a planned move is considered a huge stressor for most people; so when you are being forced into a move because of foreclosure, it can trigger all sorts of feelings."
Just as there are ways to deal with the financial ramifications of foreclosure, there are also ways to work through the emotional side of it. Harvey offers the following tips:
