Foreclosure filings in the U.S. climbed to a record for the third time in five months in July. July’s foreclosure filings rose 32 percent from a year earlier and 6.7 percent from June. A total of 360,149 properties received a default or auction notice or were seized last month.
Recall that the earlier instances of foreclosures last year were due to risky subprime lenders. Now, falling home prices and the recession (unemployment) left more homeowners unable to keep up payments or refinance. Unemployment was at 9.4 percent in July and 126,000 U.S. consumers filed for bankruptcy in July, 34 percent more than a year earlier.
About 235,000 troubled borrowers have begun modifying their property loans under the government’s Making Home Affordable Program, compared with a target population of 4 million.
On another note, regulators on Friday shut down Colonial BancGroup Inc., a big lender in real estate development that buckled under the collapse of the market. With about $25 billion in assets, it was the biggest U.S. bank to fail this year.
The bank was a major lender to developers in Florida and Nevada and was hit hard by the collapse of the real estate market in those states. BB&T Corp will takeover the bank’s 346 branches.
The failure of Colonial is expected to cost the deposit insurance fund an estimated $2.8 billion.
With the failure of 4 other banks this week, (Community Bank of Arizona, based in Phoenix; Union Bank, based in Gilbert, Ariz.; Community Bank of Nevada, based in Las Vegas; and Dwelling House Savings and Loan Association, located in Pittsburgh), the number of federally insured banks that have failed this year is now at 77.
There were 25 failures last year and only 3 in 2007.