Looming Threat For Some, Lucrative Opportunity For Others

More Americans are facing the prospect of losing their homes to foreclosure, according to a report from RealtyTrac, an online marketplace for foreclosure properties. The company's latest U.S. Foreclosure Market Report, released in November 2007, showed a rate of one foreclosure for every 196 households during the third quarter 2007--a 30% increase from the previous quarter and an increase of nearly 100% from the third quarter of 2006. During the first six months of 2007, more than 925,000 properties had entered some stage of foreclosure--up 55% over the same period in 2006.

James J. Saccacio, chief executive officer of RealtyTrac, said, "Although not all areas are being hit as hard as others, the rise in foreclosures is quite widespread, with 45 out of the 50 states documenting year-over-year increases in the third quarter."

While the foreclosure rate is expected to remain elevated above historic levels in the coming months, not all mortgage resets will end in foreclosure. In testimony given to the House Committee on Financial Services last November, U.S. Under Secretary for Domestic Finance Robert K. Steel said, "Some homeowners will be able to afford their new payments without trouble and many others will qualify for refinanced, fixed-rate mortgages on their own."

Others, Steel acknowledged, have stretched too far beyond their means, and for them, foreclosure is a possibility. "A third group of homeowners facing resets fall somewhere in the middle. The challenge is for lenders to identify the homeowners in this middle group, who with a bit of assistance can stay in their homes," said Steel.