Foreclosures jump 61 percent in NL County for first half of year
Foreclosure activity in New London County soared by more than 60 percent in the first half of this year compared with the same period in 2009, according to new statistics released Thursday by California-based RealtyTrac, leading a state economist to conclude that one of the causes of the current recession has now turned into a victim of the downturn.
"Some of what we're seeing is because of the backwash effects of the broader collapse of the economy," said University of Connecticut economist Steven P. Lanza, executive editor of The Connecticut Economy, a quarterly publication.
Lanza said foreclosures tied to high-risk loans pulled the housing market down initially, which in turn sliced into consumer spending and led to second-round effects, including job losses. Now, job losses are hampering the housing market, he said, as Congress delays extending unemployment benefits, and homeowners who were paying mortgages through savings are running out of time to save their homes.
In New London County, these effects have translated into 925 foreclosure filings in the first half of the year, a 61 percent increase from the same period last year - but still a better rate than in all but two of the state's eight counties. Local foreclosures are increasing at a slightly quicker pace than for the state as a whole, which recorded a 51.3 increase in foreclosure activity in the first half of the year.
But Jeff Gentes, foreclosure-prevention staff attorney at the Connecticut Fair Housing Center, said the statewide statistics may be a bit misleading, since in the first half of 2009 a national foreclosure-prevention program was just getting under way. The program led to banks and mortgage companies delaying some foreclosures in the first half of 2009, he said, which made the same period this year look worse than it might have otherwise.
Still, he said, "I don't see things getting better for a while .... The job market could easily just stay at a long-term crisis mode for another two years, and I wouldn't be shocked if jobs were more or less flat till 2015."
Gentes said he believes the national foreclosure situation could improve before Connecticut gets back on track, partly because the state's real-estate recession hit later than downturns in other parts of the country and partly because the state's record of job growth has been abysmal.
Gentes said Connecticut's foreclosure-mediation program and housing counseling offered by such nonprofit groups as Catholic Charities have helped keep the crisis from getting worse in the state.
Nationwide, RealtyTrac said the United States is on track to lose more than 1 million homes to foreclosure this year. This compares to only 100,000 homes foreclosed on in more normal times, RealtyTrac said.
"A massive number of distressed properties and underwater loans continues to sit just below the surface, threatening the fragile stability of the housing market," James J. Saccacio, chief executive of RealtyTrac, said in a statement.
Nevada, Florida, Arizona and California continue to lead in the percentages of homes facing foreclosure in the first half of this year. In Nevada, 64 percent of all first-quarter home sales were foreclosures, RealtyTrac has reported previously, and 31 percent of all home sales nationwide were related to distressed properties.
Nearly 2 million foreclosure filings - default notices, auction sale notices and bank repossessions - were made nationwide for the first half of the year. In the second quarter, however, filings were down almost 4 percent from the previous quarter and virtually unchanged from the same period last year.
Saccacio said lenders in the second quarter were more aggressive in approving short sales, in which banks allow homeowners to sell their properties for less than their mortgage, and agreeing to loan modifications.
"Meanwhile," he added, "the pace of properties completing the foreclosure process through bank repossession quickened as lenders cleared out a backlog of distressed inventory delayed by foreclosure prevention efforts in 2009."
Last year, more than 900,000 homes nationwide were repossessed by lenders. This year so far, almost 528,000 homes have been taken back, RealtyTrac said.
Lanza, the UConn economist, said the continuing foreclosure crisis is part of a melange of signals - iffy jobs numbers, lackluster consumer confidence and sporadic spending - currently indicating some weakening in the overall economy. The indicators have some economists wondering about a possible double-dip recession, or whether more should be done to stimulate the economy.
"The headwinds for this housing crisis are going to be around for a long time," said Lanza. "It's going to take a while to work its way out of the system."
Foreclosure filings, Jan. - June
COUNTY 2010 2009 %change
Fairfield 3,598 2,322 +55
Hartford 2,831 2,000 +41.6
Litchfield 791 444 +78.2
Middlesex 517 293 +76.5
New Haven 3,736 2,585 +44.5
New London 925 574 +61.2
Tolland 357 225 +58.7
Windham 560 358 +56.4
TOTAL 13,315 8,801 +51.3
MOST VIEWED MEDIA
MOST DISCUSSED STORIES