While some states have mandated delays to the foreclosure process, curbing the number of foreclosure filings in recent months, many report that such legislation is only a temporary cure. Foreclosure filings include default notices, auction sale notices and bank repossessions. According to James J. Saccacio, chief executive officer of RealtyTrac, October marked the 34th consecutive month where U.S. foreclosure activity increased compared to the prior year. RealtyTrac U.S. Foreclosure Market Report provides a count of the total number of properties with at least one foreclosure filing reported during the month or quarter – broken out by type of filing at the national, state and county levels.

The nationwide and state rankings performed by RealtyTrac and state census authorities, however, may not take into account homes that were sold or deeded to the lender to avoid foreclosure; homes lost in bankruptcies; mobile homes (which are usually financed through personal property loans); and mortgages tied up in predatory lending cases.

During the third quarter of 2008, the total number of foreclosure filings reported on U.S. properties was 765,558. Reports indicate that this is an increase of more than three percent from the second quarter and 71 percent from the third quarter in 2007. In October, approximately 1 in every 452 U.S. residential units was in foreclosure, with approximately 84,000 properties repossessed.

The state of Nevada has the highest foreclosure rate, with 1 in 74 homes going into foreclosure. Nevada has had the highest rate for approximately 22 consecutive months, with the city of Las Vegas carrying the top rate of foreclosures among 230 metro areas. In Las Vegas, 1 in every 62 housing units received a foreclosure filing.

Arizona, Florida and California fell into the second, third and fourth highest ranked states by the middle of November. California, however, experienced a notable decline since September, 2008, when foreclosure filings were reported on 69,548 properties. The state’s overall foreclosure activity appeared to be down by double-percentage points to around 18 percent in October. Commentators attribute some of California’s decline to its legislation, which requires lenders to contact borrowers at least thirty days before filing a default notice.

Ohio, which was ranked with the highest amount of foreclosures in recent years, dropped to number 10 in the third quarter of 2008 from number 8 in the first quarter. Currently, 1 in every 417 homes in Ohio is in foreclosure. According to one report, although Ohio’s foreclosure activity rose nearly six percent from September, it was down by thirty percent compared to October 2007.

Mid-November, the top ten states with the highest foreclosure rates were:

1. Nevada 1 in 74 homes

2. Arizona 1 in 149 homes

3. Florida 1 in 157 homes

4. California 1 in 231 homes

5. Colorado 1 in 390 homes

6. Georgia 1 in 391 homes

7. Michigan 1 in 396 homes

8. New Jersey 1 in 410 homes

9. Illinois 1 in 410 homes

10. Ohio 1 in 417 homes

So, which states rank the lowest in foreclosure ratings? In the first quarter of this year, Vermont was ranked number 50 for foreclosure filings, with 3 foreclosures per every 103,186 homes. Also, reports in early November indicate that Nebraska’s foreclosure rate ranked 49th in the nation in October and remained significantly lower than the national rate.

Although there was a $700 billion government bailout of the financial industry and mandated foreclosure legislation in some states, some feel more needs to be done.

On November 14, 2008, the FDIC Chairwoman, Sheila Bair, proposed a plan to reduce mortgage payments for delinquent borrowers. Bair’s proposal would reduce mortgage payments for delinquent homeowners to 31% of their monthly income. To qualify, homeowners would need to be at least two months behind on their payments. The plan could potentially reduce interest rates on those mortgages to as low as 3% for five years increasing one percentage point annually until reaching the market rate, and mortgage lenders could also extend the length of repayment to 40 years. Additionally, the government would share up to 50% of the losses on a mortgage if a borrower defaulted under the plan. Bair’s plan, however, still needs to be approved by the Treasury Department or Congress.

On November 20, 2008, Fannie Mae and Freddie Mac enacted a moratorium on foreclosures, telling mortgage services to halt foreclosure sales on owner-occupied homes between November 26, 2008 and January 9, 2009. This moratorium is estimated to help more than 16,000 borrowers.

While this issue has garnered the country’s attention and some progress has been made, Saccacio, discussing state legislation initiatives, seemed to sum up the country’s foreclosure crisis best, stating: “While the intention behind this legislation - to prevent more foreclosure - is admirable, without a more integrated approach that includes significant loan modifications, the net effect may be merely delaying inevitable foreclosures.”

Where will we go from here?