High Default Rates Could Trigger More Indiana Foreclosures

by on Foreclosures

Sharply rising default rates throughout Indiana could trigger a huge surge of Indiana foreclosures, based on data gathered by the Indiana Association of Realtors and Lender Processing Services.

Last year, Indiana ranked 18th among states in foreclosure rate. Again during the month of January 2010, it ranked 18th. But in February, it went up the foreclosure charts to 17th, indicating the worsening mortgage problem in the state.

According to Indiana real estate professionals, the number of homeowners in default by three months or more has reached a record level in January. In the Indianapolis metro area alone, almost eight percent of all mortgage loans are delinquent by more than 90 days.

In February, over 1,500 Indianapolis houses entered the foreclosure process, a large number of which were already listed for public home auctions and included in bank owned listings. Those planning to purchase foreclosures for sale in Indianapolis will discover that they have more to choose from in the coming months as foreclosure processes are pursued and completed by lenders.

In 2009, there were 41,405 Indiana foreclosures, and these included notices of delinquencies, trustee sales and bank repossessions. Although this number was lower than the 2008 total, it was almost 48-percent higher than the 2007 total.

Statewide foreclosure activity slowed month-over-month both in January and February, but the number of distressed properties that were repossessed by banks in February increased by more than 20 percent to 1,514 homes. Total foreclosure postings in January and February statewide reached 2,775 housing units.

According to LPS, Indiana is currently among ten U.S. states with the highest number of delinquent mortgage loans. Nationwide, the total number of noncurrent mortgage loans has increased by 21.3 percent compared to January last year. Over 1.1 million mortgage loans that were performing in January have already become delinquent in February. The nationwide default rate as of the end of January was still 10.2 percent.

Faith Schwartz, executive director of the Hope Now initiative, said there are around 4 million homeowners throughout the nation who are delinquent by more than two months. Schwartz added that government and private agencies have been helping modifying mortgages, but as of January, only around 150,000 mortgage loans have been modified.

Indiana foreclosures are also being addressed by lenders such as JP Morgan Chase, which stepped up its efforts in helping distressed homeowners, but the unemployment problem in the state is still driving the sharp increase in default rates statewide.

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