Foreclosure surprise: 10 fastest-growing problem cities are newcomers

Christian Science Monitor ^ | 28 October 2009 | Laurent Belsie

[Lorianne]

Just about everyone has become familiar with America’s foreclosure capitals – metropolitan areas like Las Vegas with the nation’s highest rate of foreclosed properties (1 in 20) or No. 2 Merced, Calif., (1 in 27).

But the problem is expanding to new cities. In fact, as the subprime-mortgage crisis eases for some of the top metro areas, like Merced and No. 3 Cape Coral-Fort Myers, Fla., economic pressures are creating new foreclosure capitals. One of them, Reno-Sparks, Nev., broke into the Top 10 foreclosure metros in the third quarter, according to a RealtyTrac report released Thursday. And others are gaining fast.

“These are places that were on no one’s radar screen a year ago,” says Rick Sharga, senior vice president at RealtyTrac, an online foreclosure marketplace based in Irvine, Calif. Now, stressed by rising unemployment and the resetting of exotic mortgages, their foreclosure numbers are skyrocketing.

[Lorianne]

[C19fan]

Half interesting but it is like saying I only had a penny in my pocket and I found a penny on the street therefore my “wealth” has just doubled.

[April Lexington]

Foreclosure. Coming to a neighborhood near you!

[JasonC]

Quite. They are ranking by a year over year rate of change without regard to the base level. Meaningless.

If you looked instead at actual value of foreclosures you'd still see the same places represented - sunbelt where the housing boom was largest in places built and the price movement happened last, Florida, plus California for the ridiculousness of its peak prices.

[Valpal1]

I find it interesting that several of those cities (Provo, Salt Lake and Ft. Collins) have relatively low unemployment rates, so lack of income is probably not the reason for the spiking foreclosure rate.

Regulators should be taking a close look at whether fraudulent lending practices in those cities might account for the foreclosure rate. Looks like a lot of people may be walking away from houses they are upside down in, now that the housing bubble makes house-flipping a nonpaying proposition.

[P.O.E.]

As these places foreclose and resettle, they will no longer be counted as foreclosures. So new “foreclosure clusters” will appear.

It’s a bit of statistical sleight-of-hand.

Not to gainsay the foreclosure problem, but I think a cumulative number would be more useful.

[Neidermeyer]

The foreclosure rate is meaningless as the banks can manipulate that figure by simply not foreclosing, in many/most instances it is to their advantage to do so and keep the bad loans on the books at an inflated valuation. What is important is the 30 and 90 day late figures. In some of these cities I would suspect a strong bank took over a local with bad loans and cleaned house.