Foreclosures Hit Record High in March

Foreclosures shot up to a new all-time high in March, as banks ended self-imposed moratoriums that had been put in place to allow distressed homeowners time to seek assistance.

Over 175,000 homes were lost to foreclosure in March, according to the foreclosure listing service ForeclosureS.com. The figures represents a 44 percent increase over February's previous record of nearly 122,000 homes.

Many lenders, including government-backed giants Fannie Mae and Freddie Mac, had suspended new foreclosure actions in recent months until the details of the administration's homeowner assistance program, Making Home Affordable, to become available. Others deferred foreclosures while they put their own refinancing and loan modification programs in place and identified eligible homeowners.

Most of those moratoriums ended in early March. As lenders identify which borrowers are likely to qualify for assistance, they are resuming foreclosure actions against those who will not.

"The floodgates of foreclosure opened with the expiration of these foreclosure freezes," said ForeclosureS.com president and CEO Alexis McGee. "With rising unemployment, a backlog of delayed foreclosures and increasing abandonment of properties, foreclosures soared in March to levels we have not seen in this crisis."

Even with the moratoria, close to 370,000 homes have been foreclosed by lenders this year - approximately 1.8 percent of the entire U.S. housing stock. The total represents a 76 percent increase over the 210,000 reported in the first quarter of 2008, according to the U.S. Foreclosure Index. Pre-foreclosure filings - an indication of upcoming foreclosures - topped 600,000 in the first quarter of 2009, another record level.

Lenders such as Wells Fargo, J.P. Morgan Chase, Citigroup and GMAC say they temporarily halted foreclosures at the request of the Obama administration, which unveiled its Making Home Affordable homeowner assistance program on March 4. They say they are now reviewing files to see which homeowners are likely to benefit from the program and moving ahead with actions on delinquent accounts which will not qualify for refinancing or modifications.

Despite the skyrocking foreclosure rate, the housing market is showing some signs of life, with rising home sales spurred by low prices and interest rates, the former a direct result of the foreclosure crisis. California had the highest monthly increase in foreclosures at 59 percent in March, but also posted an 83 percent increase in home sales in February, which put it among the nation's leaders in that area as well.