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Fewer Foreclosures - For Now


New regulations may help keep people in homes.

August's foreclosure filings rose 27% as compared with the same month a year ago, but the increase was significantly slower than in previous months.

RealtyTrac says 303,800 homeowners received at least one foreclosure-related notice in August, a 12% increase from July.

However, June and July had year-over-year increases of 50% or more. Nevertheless, the number of foreclosure filings is still at its highest since RealtyTrac began filing its report in January 2005.

"The lower annual percentage increase this month is due to a big spike in activity last August - particularly in default activity," James J. Saccacio, CEO of RealtyTrac, said in a prepared statement. "Over the past few months, we've seen annual increases in default and auction activity moderating, and that trend continued in August with default activity up just 10% from a year ago and auction activity up 7% from a year ago."

The Irvine, California-based company tracks default notices, auction sales and bank repossessions. About 90,893 houses were repossessed by lenders nationwide in August, up from 43,141 in August 2007.

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Nevada had the highest foreclosure rate in the nation, followed by California and Arizona. Filling out the top 10 states were Florida, Michigan, Georgia, Ohio, Colorado, Illinois and Indiana. However, Michigan, Georgia, Ohio and Colorado reported year-over-year rate decreases.

Sluggish sales, declining home values and increasingly stricter lending practices combined with a slowing US economy have left some homeowners owing more than their house is worth. This means many can't refinance or buy a more affordable house.

Some banks stuck with foreclosed properties slash prices in an effort to get them off the books.

On Thursday, 4 Democratic senators urged Fannie Mae (FNM) and Freddie Mac (FRE) to halt foreclosures for 90 days. The Senators said the mortgage companies, seized by the government on Sunday, should help homeowners move into more affordable loans and say in their homes.

Saccacio also said:

"The increases in default and auction activity could be slowing partly as the result of new legislation passed in several states that's designed to give homeowners in distress more time before foreclosure proceedings are initiated.

"In addition, some lenders are adopting loan servicing guidelines that encourage more proactive approaches to helping homeowners avoid foreclosure. The question now is whether these measures will actually reduce foreclosures or simply cause a temporary lull in foreclosure activity."

RealtyTrac's report relies on documents filed in the 3 phases of foreclosure: default (notice of default and lis pendens); auction (notice of trustee sale and notice of foreclosure sale); and real estate owned, or properties that have been foreclosed on and repurchased by the bank.
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