NEW YORK - The bleakest year in the foreclosure crisis has only just begun.
Lenders are poised to take back more homes this year than any other since the U.S. housing meltdown began in 2006. About 5 million borrowers are at least two months behind on their mortgages, and industry experts say more people will miss payments because of job losses and also loans that exceed the value of the homes they are living in.
“2011 is going to be the peak,” said Rick Sharga, a senior vice president at foreclosure tracker RealtyTrac Inc. The firm predicts 1.2 million homes will be repossessed this year.
The blistering pace of foreclosures this year will top 2010’s, when a record 1 million homes were lost, RealtyTrac said Thursday.
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One in every 45 U.S. households received a foreclosure filing last year, a record 2.9 million of them. That’s up 1.67 percent from 2009.
Foreclosures are expected to remain elevated throughout the year, pushing home prices down another 5 percent nationally before finally bottoming out.
The number of homes that received at least one foreclosure- related filing in December was the lowest monthly total in 30 months. Total notices fell 1.8 percent from November and 26.3 percent from December 2009, RealtyTrac said.
Banks temporarily halted actions against borrowers severely behind on their payments after allegations of improper eviction surfaced in September.
However, most banks have since resumed foreclosures and the first quarter will likely bear that out, Sharga said.
The pain likely will be the most acute in states that have already suffered the worst. For the most part, it will be states that saw the biggest housing booms: Nevada, Arizona, Florida and California. They will be joined by states hit hardest by the economic downturn, including Michigan and Illinois.
And on Wednesday, Illinois lawmakers approved a 66 percent income-tax increase in a desperate bid to end the state’s crippling budget crisis.
More than half of the country’s foreclosure activity came out of five states in 2010: California, Florida, Arizona, Illinois and Michigan.
Together, these states recorded almost 1.5 million households receiving a filing, despite year-over-year decreases in California, Florida and Arizona.
Nevada posted the highest foreclosure rate in 2010 for the fourth straight year, despite a 5 percent decline in activity from the year before. One in every 11 households received a foreclosure filing last year in the state.
In December, foreclosure activity increased 18 percent from November with a 71 percent spike in bank repossessions.
RealtyTrac tracks notices for defaults, scheduled home auctions and home repossessions – warnings that can lead up to a home eventually being lost to foreclosure.