Six states main sites of record foreclosures

Foreclosure filings in April rose just 1 percent from March, with the same six states responsible and Pennsylvania and New Jersey remaining low in the rankings.

Yet RealtyTrac Inc., of Irvine, Calif., reported that the filing rate reached a record 1 in 374 U.S. housing units last month. Much of the activity was in the initial stage - default and auction - indicating that rising joblessness may be exacerbating the problem.

In fact, some economists say they believe that the chief source of foreclosures has been, in the words of Christopher Foote of the Boston Federal Reserve Bank, "not mortgages with high DTI [debt-to-income] ratios or otherwise relaxed risk characteristics," but "the interaction of falling prices and adverse life events."

In other words, said economist Patrick Newport of IHS Global Insight Inc., of Lexington, Mass., deaths, divorces, and job losses are the main factors leading to foreclosures.

This is not news to Patricia Hasson, president of the Consumer Credit Counseling Service of the Delaware Valley Inc., which covers a region with an 8.1 percent jobless rate.

"The primary reason for housing delinquency remains income-related: unemployment, decreased income, and similar reasons," Hasson said. "This is not to say that bad mortgages aren't present or a problem, but the root of the problem still lies with decreased income."

If there can be a positive side to a record 2.1 million foreclosure filings so far since the housing boom ended nationally in early 2006, it is that the number of sales of houses repossessed by banks is in decline at the moment.

"Bank repossessions were down on a monthly and annual basis to their lowest level since March 2008," said James J. Saccacio, chief executive officer of RealtyTrac.

Repossessions will likely spike as these new filings move through the foreclosure process over the next few months. That is unless the government's Making Home Affordable program succeeds in modifying or refinancing the estimated nine million home loans that President Obama has targeted for rescue.

Economists, including Economy.com's Mark Zandi, say they believe that the actual number of borrowers rescued may be closer to two million, but that results will not start being felt until year's end.

In the Philadelphia area, foreclosure sales in the first quarter accounted for 3.7 percent of all residential transactions in the eight-county area, according to the real estate search engine Zillow.com.

In the six hardest-hit states - Nevada, Florida, California, Arizona, Illinois and Ohio - they averaged 50 percent to 80 percent, boosting overall sales as they slashed median prices.

Pennsylvania was 31st on the RealtyTrac list for April, with 1 in every 1,085 homes with a filing, while New Jersey was 22d, with 1 in every 695 houses.