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Over one million Americans seen losing homes in 2011

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 US housing meltdown began in 2006. About five 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, when a record one million homes were lost, according to RealtyTrac.

One in every 45 US households received a foreclosure filing last year, a record 2.9 million of them. That’s up 1.67 per cent from 2009.

Last week Freddie Mac reported that fixed mortgage rates dipped this week for the second straight time, extending a sliver of hope for some home owners.

The average rate on the 30-year mortgage dropped to 4.71 per cent from 4.77 per cent the previous week. The rate on the 15-year loan, a popular refinance choice, slipped to 4.08 per cent from 4.13 per cent.

But both are a half-point higher than the lows they reached in November. The 30-year loan rate hit a 40-year low of 4.17 per cent and the 15-year mortgage rate fell to 3.57 per cent, the lowest level on records starting in 1991.

The dip has led more borrowers to apply for a refinance, but would-be buyers remain hesitant, according to Wednesday’s mortgage indexes from the Mortgage Bankers Association. It will take more than low mortgage rates to jumpstart a housing market plagued by high unemployment, falling prices, tighter credit standards.

The glut of foreclosures has compounded the problem and while the pace moderated in the final months of 2010, that isn’t expected to last.

Foreclosures are expected to remain elevated throughout the year, pushing home prices down another five per cent 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, Mr 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 in Illinois lawmakers have approved a 66 per cent 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 five per cent 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 per cent from November with a 71 per cent spike in bank repossessions.

Arizona and California also showed sharp December increases in the number of homes that banks reclaimed, at 52 per cent and 47 per cent, respectively. Arizona, along with Florida, finished the year at number two and number three for the highest foreclosure rates.

One in every 17 Arizona households got a foreclosure filing last year, while one in 18 received a notice in Florida.

California, Utah, Georgia, Michigan, Idaho, Illinois and Colorado rounded out the top 19 states with the highest foreclosure rates.

RealtyTrac tracks notices for defaults, scheduled home auctions and home repossessions – warnings that can lead up to a home eventually being lost to foreclosure.

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