High unemployment drove foreclosures in 2010

Here is a good article explaining one of the main reasons why we have so many foreclosures in the system.

By Julie Schmit, USA TODAY

The pace of foreclosure filings slowed last year in the nation's hardest-hit housing markets but picked up in other U.S. metropolitan areas. High unemployment drove up foreclosures in 72% of 206 leading metropolitan areas last year, including many not hit as hard by the initial foreclosure waves that pounded cities in Nevada, California and Florida, market researcher RealtyTrac reports today.


Las Vegas posted the nation's highest metropolitan foreclosure rate, with one of nine homes receiving a foreclosure filing last year. That was down 7% from 2009.


Foreclosure filings dropped year-over-year in 17 of the 20 leading metro areas that had the highest foreclosure rates, RealtyTrac says. Nationwide, activity rose almost 2%.


While activity fell in some of the hard-hit areas, it increased in others.


Filings rose 3% in the Boise City-Nampa, Idaho, area last year from 2009. Greeley, Colo., saw a 12% rise. In both, one in 21 homes received a foreclosure filing last year.


The Atlanta region posted a 21% jump in filings last year. One in 23 homes received a foreclosure filing.


Nationwide, the rate was one in 45 homes.


"The recession has been brutal. The side effect of that is typically more foreclosures," says Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University.


The Seattle-Tacoma area also saw a 23% jump in foreclosure filings last year. Houston's rose 26%. But activity in those areas last year was still below the national average, RealtyTrac says.


"Foreclosures became more widespread in 2010 as high unemployment drove activity up," says James Saccacio, RealtyTrac CEO.


Despite some dips in hard-hit areas, foreclosure levels remained five to 10 times higher than historic norms in most of those markets, Saccacio said.


Activity will roar back in those regions, says Mark Zandi, chief economist of Moody's Analytics.


Last fall, major mortgage servicers, including Bank of America, delayed foreclosure activity as they revamped paperwork following revelations that foreclosure documents may have been improperly prepared. Zandi says the delays were more pronounced in the biggest housing-bust markets.


He expects foreclosure activity to pick up substantially in those areas in the next few months as the foreclosure process issues are resolved. Almost 2.9 million U.S. homes received foreclosure filings last year, a record high.