Foreclosures: April Was Bad

Foreclosures in April exceeded even March’s blistering pace with a record 342,000 homes receiving notices of default, auction notices or undergoing bank repossessions.

One of every 374 U.S. homes received a filing during the month, the highest monthly rate that RealtyTrac, an online marketer of foreclosed properties, has recorded in four-plus years of record keeping.

According to RealtyTrac’s report, the lion’s share of April’s filings were ones in the early stages of the process, such as notices of default.

Not helping, of course, is the steady erosion of home prices. The National Association of Realtors reported record home price losses recently.

The loss of home values put many more mortgage borrowers underwater, meaning they owe more on their loans than their homes are worth. That increases foreclosure rates in two ways: Underwater borrowers have no home equity to draw on should to pay for unexpected expenses such as big medical bills or major car or home repairs. That’s makes them more likely to miss payments. And when home values fall far below mortgage balances, homeowners often walk away from their loans.