Record Foreclosures in Third Quarter of 2009

U.S. foreclosure filings hit an all-time high in the third quarter of the year, according to the foreclosure data firm RealtyTrac, with one home in 136 receiving at least one foreclosure filing during that period.

The all-time high came despite a 4 percent decrease in foreclosure filings in September, the last month of the quarter. The September tally was still the third highest since RealtyTrac began publishing foreclosure data in 2005, topping only August and July of this year, meaning the three worst months for foreclosures were all in the third quarter of 2009.

A total of 938,000 properties were reported as receiving foreclosure filings in the third quarter of the year, with that number including notices of default, notices of scheduled auctions and actual bank repossessions. The figure marked a 5 percent increase from the second quarter of the year and an increase of nearly 23 percent from one year before.

Actual bank repossessions were up sharply in the third quarter, increasing 21 percent following rising defaults and scheduled auctions in the first two quarters of the year. The increase seems to indicate that lenders are beginning to work through a backlog of distressed properties caused by legislatively mandated moratoriums, loan modification efforts and high foreclosure rates in general, according to RealtyTrac CEO James Saccacio.

Foreclosures concentrated in just six states

Six states accounted for more than 60 percent of all foreclosure activity, with California, Florida, Arizona, Nevada, Illinois and Michigan recording nearly 580,000 foreclosure filings combined in the third quarter of the year. Nevada continued to have the nation's highest foreclosure rate, with one residential property in 23 receiving a foreclosure filing. Florida continued to have the nation's second-highest rate, 1 in 56, despite a 1 percent decrease in filings from the second quarter of the year and a 6 percent decrease in defaults.

California alone accounted for 27 percent of all foreclosure activity, with more than 250,000 filings during the quarter. Even so, this represented a 2 percent drop from the second quarter of the year, thanks to a 10 percent drop in defaults, although actual bank repossessions increased 12 percent.

Two states in five show big jumps

Many states that had been performing relatively well showed steep increases in foreclosure activity in the third quarter, with 19 states posting increases in excess of 20 percent. Connecticut, currently ranked 25th in foreclosure rates, posted a 68 percent increase in foreclosure filings in the third quarter, while 40th-ranked Mississippi increased by 50 percent. Kansas, currently ranked 31st, saw an increase of nearly 40 percent, while Maryland, with a heavy concentration of Washington, DC suburbs, rose to 12th on the list due to a nearly 60 percent increase in foreclosure filings.

A handful of states did show declining rates, led by Indiana, where foreclosure filings were down 12.75 percent from the previous quarter and 15.77 percent from one year earlier. Alabama, Delaware, Rhode Island, Washington, New Hampshire, Ohio and Wyoming also posted declining rates of nearly 5 percent or more.