WASHINGTON – The foreclosure crisis appears to be leveling off.
The number of people facing foreclosure is nearly flat from a year ago, according to the latest report from a private foreclosure listing service. A third fewer people are receiving legal warnings that they could lose their homes. And foreclosures are receding in some of the hardest-hit cities.
Still, the number of foreclosures remains extraordinarily high. Experts caution that a big reason for the stabilization is that banks are letting delinquent borrowers stay longer in their homes rather than adding to the glut of foreclosed properties on the market. New consumer protection laws, which vary by state, have also meant borrowers can spend more time in their homes.
A new wave of foreclosures could be coming in the second half of the year, especially if the unemployment rate remains high, mortgage-assistance programs fail, and the economy doesn't improve fast enough to lift home sales.
"It's not anything like a recovery yet," said Rick Sharga, a senior vice president at RealtyTrac Inc., a foreclosure listing service.
RealtyTrac reported Thursday that nearly 323,000 households, or one in every 400 homes, received a foreclosure-related notice in May. That was up 0.5 percent from a year earlier but down 3 percent from April. The report tracks notices for defaults, scheduled home auctions and home repossessions.
But in a sign that the crisis is far from over, the number of homeowners who lost their homes to foreclosure hit a record of nearly 94,000 in May. That number may finally peak next year, as lenders try to work their way through millions of delinquent loans.
Economic woes, such as unemployment or reduced income, are the main catalysts for foreclosures this year. Initially, lax lending standards were the culprit. Now, homeowners with good credit who took out conventional, fixed-rate loans are the fastest growing group of foreclosures.
A record high of more than 10 percent of homeowners with a mortgage had missed at least one payment as of the end of March, according to the Mortgage Bankers Association. But the number of homeowners just starting to show trouble is trending downward as the economy improves.
"That's a very good thing," said Thomas Lawler, an independent housing economist in Virginia. But he noted that even with that positive trend, "you are highly likely to see an acceleration in the number of actual completed foreclosures."
Lenders are offering to help some homeowners modify their loans. But many borrowers can't qualify or they are falling back into default. The Obama administration's $75 billion foreclosure prevention effort has made only a small dent in the problem.
About 25 percent of the 1.2 million homeowners who started the program over the past year had received permanent loan modifications as of April. About 23 percent of those enrolled dropped out during a trial phase that lasts at least three months. Many more are in limbo.
Among states, Nevada posted the highest foreclosure rate in May. One in every 79 households there received a foreclosure notice. However, foreclosures there are down 16 percent from a year earlier.
Arizona, Florida, California and Michigan were next among states with the highest foreclosure rates. Rounding out the top 10 were Georgia, Idaho, Illinois, Utah and Maryland.
Las Vegas continued to be the city with the nation's highest foreclosure rate, but activity there was down 18 percent from a year earlier. And nine out of the top 10 cities with the highest foreclosure rates posted annual declines. The exception was the Vallejo-Fairfield area in California, where foreclosures were up 1 percent from a year ago.
Foreclosed homes are typically sold at steep discounts, lowering the value of surrounding properties. That's a concern for local communities, and a drag on the economic recovery.
In recent months, home prices have started to sink again after stabilizing last summer. Economists at Goldman Sachs predicted in a report last week that prices will fall about 3 percent nationally over the next year, with the largest declines in cities where mortgage defaults are rising.
"The housing market remains plagued by enormous excess supply," wrote Goldman economist Sven Jari Stehn.
TOKYO – Asian stock markets were mixed in early trading Thursday as investors fretted over Europe's debt crisis and whether the Gulf of Mexico oil spill could send petroleum giant BP into bankruptcy court.
Japan's benchmark Nikkei 225 stock average added 30.50 points, or 0.3 percent, to 9,469.63 in the morning session.
The Nikkei held firm as the government said Japan's economy — the world's second-largest — grew a revised 5.0 percent in the January-March quarter, up from an earlier estimate of 4.9 percent growth.
Big losers in Tokyo included major trading house Mitsui & Co. Ltd, whose shares plunged 7.3 percent to close the morning session at 1,081 yen. A Mitsui unit — Mitsui Oil Exploration Co. Ltd. — owns a 10 percent stake in the well where the leak occurred.
Mitsui Oil Exploration is not listed on the stock exchange.
South Korea's Kospi index slipped 0.33 points to 1,646.89, while Australia's S&P/ASX 200 was up 0.9 percent at 4,442.20.
Hong Kong's Hang Seng fell 0.5 percent to 19,517.61. Benchmarks in mainland China declined, but shares in Singapore and Taiwan rose marginally.
In New York Wednesday, the Dow Jones industrial average fell 40.73 points, or 0.4 percent, to 9,899.25. While the Dow gained more than 125 points at midday, it slumped later as investors sold energy stocks on fears that the U.S. oil spill disaster could force BP to seek bankruptcy protection.
Across Asia, investors were cautious amid lingering concern over Europe's fiscal crisis and its impact on a global economic recovery.
In currencies, the dollar declined to 91.19 yen in Tokyo Thursday from 91.26 yen in New York late Wednesday. The euro slipped to $1.1970 from $1.1980.
Benchmark crude for July delivery rose $2.55 to $74.54 a barrel on the New York Mercantile Exchange.
BEIJING – China's imports and exports both surged by nearly 50 percent in May over a year earlier in a positive sign for growth in the third-largest economy.
Exports rose 48.5 percent in May, while imports were up 48.3 percent, the Chinese customs agency reported Thursday.
The data might help to temper concerns that China's economy may slow due to the European debt crisis and lending curbs imposed by Beijing to cool surging housing prices.
The strong export growth also might help clear the way for the government to allow China's currency, the yuan to rise. The yuan has been held steady against the dollar since late 2008 to help exporters compete amid weak demand but Washington and other trading partners want Beijing to ease its controls, which they say are distorting trade.
Import growth eased slightly from April's 49.7 percent surge, but the expansion in exports accelerated from April's 30.5 percent level.