Homes facing foreclosure more than doubled in 1Q from 2007

Homes facing foreclosure more than doubled in 1Q from 2007
Tuesday April 29, 6:18 am ET
By Alex Veiga, AP Business Writer
Number of US homes facing foreclosure jumps 112 percent in first quarter from 2007

LOS ANGELES (AP) -- The number of U.S. homes heading toward foreclosure more than doubled in the first quarter from a year earlier, as weakening property values and tighter lending left many homeowners powerless to prevent homes from being auctioned to the highest bidder, a research firm said Monday.

Among the hardest hit states were Nevada, Florida and, in particular, California, where Stockton led the nation with a foreclosure rate that was 6.6 times the national average, Irvine, Calif.-based RealtyTrac Inc. said.



Nationwide, 649,917 homes received at least one foreclosure-related filing in the first three months of the year, up 112 percent from 306,722 during the same period last year, RealtyTrac said.

The latest tally also represents an increase of 23 percent from the fourth quarter of last year.

RealtyTrac monitors default notices, auction sale notices and bank repossessions.

All told, one in every 194 households received a foreclosure filing during the quarter. Foreclosure filings increased in all but four states.

The most recent quarter marked the seventh consecutive quarter of rising foreclosure activity, RealtyTrac noted.

"What would normally alleviate the foreclosure situation in a normal market is people starting to buy properties again," said Rick Sharga, RealtyTrac's vice president of marketing.

However, the unavailability of loans for people without perfect credit and a significant down payment is slowing the process, he said.

"It's a cycle that's going to be difficult to break, and we're certainly not at the breaking point just yet," Sharga added.

The surge in foreclosure filings also suggests that much-touted campaigns by lawmakers and the mortgage lending industry aimed at helping at-risk homeowners aren't paying off.

Hope Now, a Bush administration-organized mortgage industry group, said nearly 503,000 homeowners had received mortgage aid in the first quarter. Most of the aid was temporary, however.

Pennsylvania was a notable standout in the latest foreclosure data. The number of homes in the state to receive a foreclosure-related filing plunged 24.4 percent from a year earlier.

Sharga credited the decline to the state's foreclosure relief measures, noting that cities such as Philadelphia put in place a moratorium on all foreclosure auctions for April and implemented other measures aimed at helping slow foreclosures.

Nearly 157,000 properties were repossessed by lenders nationwide during the quarter, according to RealtyTrac.

The flood of foreclosed properties on the market has contributed to falling or stagnating home values, yet lenders have yet to implement heavy discounts on repossessed homes, Sharga said.

Nevada posted the worst foreclosure rate in the nation, with one in every 54 households receiving a foreclosure-related notice, nearly four times the national rate.

The number of properties with a filing increased 137 percent over the same quarter last year but only rose 3 percent from the fourth quarter.

California had the most properties facing foreclosure at 169,831, an increase of 213 percent from a year earlier. It also posted the second-highest foreclosure rate in the country, with one in every 78 households receiving a foreclosure-related notice.

California metro areas accounted for six of the 10 U.S. metropolitan areas with the highest foreclosure rates in the first quarter, RealtyTrac said.

Many of the areas -- including Stockton, Riverside-San Bernardino, Fresno, Sacramento and Bakersfield -- are located in inland areas of the state where many first-time buyers overextend themselves financially to buy properties that have plunged in value since the market peak.

"California still hasn't hit bottom," Sharga said. "We have a lot of California homes that are in early stages of default that may not be salvageable because either there's no market or financing available, or both."

Arizona had the third-highest foreclosure rate, with one in every 95 households reporting a foreclosure filing in the quarter. A total of 27,404 homes reported at least one filing, up nearly 245 percent from a year ago and up 45 percent from the last quarter of 2007.

Florida had 87,893 homes reporting at least one foreclosure filing, a 178 percent jump from the first quarter of last year and a 17 percent hike from the fourth quarter last year. That translates into a foreclosure rate of one in every 97 households.

The other states among the top 10 with the highest foreclosure rates were Colorado, Georgia, Michigan, Ohio, Massachusetts and Connecticut.

RealtyTrac Inc.: http://www.realtytrac.com

Magic Johnson's urban development fund hits pay dirt

REAL ESTATE

By Roger Vincent, Los Angeles Times Staff Writer
April 16, 2008



Magic still seems to have his touch.

At a time when many sources of financing for real estate projects are drying up, a fund co-founded by former Lakers guard Earvin "Magic" Johnson has banked $1 billion for commercial developments in urban neighborhoods.

Development fundCanyon-Johnson Urban Fund is expected to announce today that its third round of financing, which eclipses the combined $900 million total of its two predecessor funds, will make possible more than $4 billion in new development and upgrades of property in the country's largest metropolitan markets.

"The potential for continued revitalization in ethnically diverse communities is nearly limitless," Johnson said.



The fund is a partnership between Johnson and Beverly Hills-based Canyon Capital Realty Advisors. Among the projects Canyon-Johnson has completed: the construction of a retail and apartment complex in Hollywood and the replacement of Chicago's old police headquarters with condos and shops.

The need to upgrade urban centers is growing fast, said Bobby Turner, managing partner of the fund. The country's population is rising at a rate of 3 million annually, 90% of whom will be immigrants or people of color. Many of them head to urban centers with large minority populations.

"Demand for affordable housing and community-serving retail is only going to increase," Turner said. The continuing global credit crunch will limit the ability of some developers to get financing and further aggravate the gap between supply and demand, he predicted.

Investors in the Canyon-Johnson fund aren't deterred by the national real estate slump, Turner said. "We were able to impress on our investors that we are not investing for the next two or three years; we are investing for the next decade."

Investors in Canyon-Johnson -- including the California Public Employees' Retirement System, the University of Michigan and Verizon Communications Inc. -- can profit when projects that the fund undertakes are sold. For example, Canyon-Johnson and a partner, New Pacific Realty, paid about $100 million for the AT&T Center, formerly Transamerica Center, in downtown Los Angeles in 2003, upgraded the property and sold it for more than $200 million.

New York's pension fund has invested in all three Canyon-Johnson funds, city Comptroller William C. Thompson Jr. said.

"We have expanded our investments into real estate and we thought they represented an excellent opportunity to invest in a fund targeting urban centers and also generate a good return," Thompson said. "They were pioneers in urban investment."

Johnson, a former NBA star known for his enthusiasm and flash on the court, has been a key partner in the fund's money-raising and community outreach efforts. He also brings to the table his network of corporate partnerships with Loews Cineplex Entertainment Corp. (Magic Johnson Theatres), Starbucks Corp., Burger King Corp., 24 Hour Fitness Worldwide Inc. and Washington Mutual Inc., which has set up home-loan centers in low-income neighborhoods.

Johnson said he listened closely to residents in neighborhoods where the real estate funds he represented were invested. "We don't just go in and build what we want," he said.

Locals have asked for such services as bookstores, coffee bars and home furnishing shops. "These are often not found in our community," Johnson said.

In Milwaukee people asked for a Wal-Mart, and at a shopping center in Houston the neighbors wanted a police substation.

Canyon-Johnson is also committed to making its projects environmentally friendly, Turner said. The fund has helped pay for $2 billion worth of green development, he said, including a $70-million residential and retail tower in downtown Nashville.

It was the first green residential high-rise in the Southeast preapproved by the United States Green Building Council.

"Being green is not only the right thing to do environmentally but the smart thing to do financially" because it saves money on power, water and other costs, Turner said.

Nashville Mayor Karl Dean keeps a basketball autographed by Johnson in his office, said Paul Ney, director of economic and community development, "but he is more delighted that a group of savvy investors elected to invest in our downtown revitalization efforts."

Other cities where Canyon-Johnson has invested include Atlanta, Baltimore, Chicago, Las Vegas, San Diego and Washington. Two or three major projects are under consideration in Los Angeles, Johnson said, though he declined to offer specifics because negotiations were still underway.

"We will always invest money in L.A.," he said. "This is home."

roger.vincent@latimes.com