Third quarter reports from RealtyTrac show that the number of foreclosure filings hit a record high at the end of the third quarter. What happened? Aren’t the government-led and lender-supported modification programs supposed to prevent this tragedy?
The third quarter is “the worst three months of all time,” said Rick Sharga, spokesman for RealtyTrac. According to the RealtyTrac report, 937,840 homes received a foreclosure letter; meaning a default notice, auction notice, or bank repossession in the third quarter. In September alone, 343,638 properties received some form of foreclosure filing. That means one in every 136 U.S. homes were in foreclosure. That is a 5% increase from the second quarter and an increase of nearly 23% over the same quarter last year. The third quarter numbers are the highest foreclosure rates since RealtyTrac began issuing reports in the first quarter of 2005.
During the third quarter, a record 237,052 homes were repossessed, which is a 21% jump from the previous three months. Lenders have taken back 623,852 homes this year. Corresponding REO activity reached a record level as well.
Despite government stimulus efforts, state and lender foreclosure moratoriums, and modification programs, borrowers are still falling into default and foreclosure. Some people believe that the efforts made by the government fail to address the root causes of the problem. Namely, unemployment among the “good credit” borrowers, and principal balance reductions needed for “underwater” borrowers with highly complex loans.
The third quarter numbers as a whole are staggering. However, there was a 4% decrease in foreclosure filings from August to September.

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