RealtyTrac Chief Executive James J. Saccacio said the 243,353 foreclosure filings last month was the highest since his firm began tracking the data in January 2005, The Wall Street Journal reported.

“Although only about 2% of households nationwide are in foreclosure, these properties contribute to already bloated inventories of homes for sale, and put downward pressure on home values,” Saccacio noted.

Nationwide, one in every 519 households received a foreclosure notice.

California, Florida, Nevada and Arizona were the hardest-hit states. California had the highest number of total filings with 64,683 properties falling into foreclosure while Nevada had the highest foreclosure rate, with one in every 146 households filing for foreclosure.

And while current foreclosure levels are at record highs, Saccacio expects the situation to get worse. The credit markets remain tight, making it difficult for overextended homeowners to obtain refinancing that might help them to avoid foreclosure.

“Loan modification isn’t working,” Ira Rheingold, executive director of the National Association of Consumer Advocates in Washington, told Bloomberg News. “It’s extremely difficult for a homeowner to talk to a servicer and even if they do, it’s hard to get the servicer to change the terms. You get voice-mail hell, they don’t return calls, you can’t get a live person on the phone.”

At the same time that consumers are finding it hard to obtain needed financing, the high level of housing inventory, currently at an 11-month supply, is making it very difficult for distressed homeowners to sell.

Saccacio stated that he expects foreclosure filing levels to “remain high and even increase” through the end of the year, particularly “given the number of loans due to reset through the middle of 2008 and the continuing weakness in home sales.”

In fact, banks will continue to seize about 60,000 properties a month through December, Bloomberg reported. At that rate, about 1 million U.S. homes, or 25% of all homes for sale, could be bank-owned, Rick Sharga, RealtyTrac’s executive vice president of marketing, said in an interview.

Source: Home Foreclosures Continue to Rise 

This is alarmingly muddled thinking. Cutting down on meals out and shopping for the “millions weighed down by high lifestyle costs”, as Axa puts it, may feel painful. But abandoning Isas and Sipps instead, just as the property market turns, will prove far more costly.

First off, few dispute that gravity is now reasserting itself on UK house prices – the IMF’s latest forecast predicts a 30% drop for UK property, while March saw the largest monthly fall in UK house prices since 1992, says the Halifax. This should snap more people out of the delusion that their house will not only provide a place to live, but will also pay for their eventual retirement, when they will free up lots of capital by downsizing.

The Turner Report on pensions a few years ago exposed this logic as flawed. The latest Land Registry figures reveal why. The gap between an average detached house and a semi-detached house or flat in England and Wales is about £100,000 – enough to buy an income of just over £6,000 per year using a retirement annuity – while the gap between semis and flats is zero. Since we all have to live somewhere, then even assuming you can face selling the family home on retirement, the pickings from downsizing look slim – unless you move to a much cheaper area, or downsize to a shoebox, or both.

So we can’t rely on bricks and mortar to fund our retirement. How about shares? Some worry that buying now, when prices might fall further, makes no sense; and yes, in an ideal world we’d all buy right at the bottom and sell exactly at the top. But that would require extraordinary amounts of luck. What most private investors actually do is to hold off buying until share prices are in an uptrend and are already expensive. They then compound the problem by delaying selling until prices are clearly falling, not realising that by then shares may be relatively cheap.

This is the main reason why, says Dalbar.com, the average investor only made 3.9% over the 20 years to 2005, when the S&P 500 averaged over 11%. The easiest way to avoid this trap is to drip-feed an affordable amount into a cheap tracking product, such as an exchange-traded fund, through a tax-effective wrapper, such as an Isa or Sipp.

If you really don’t want to invest in stocks, there’s always cash. Right now, there are plenty of decent savings rates out there as banks compete for custom – see our compare savings accounts page for more details. Whatever you decide, the main point is that you need to save more than ever when times are hard. So if you plan to cut back, ditch the takeaways, not your piggy bank.

http://www.moneyweek.com/file/45482/why-cutting-back-on-saving-is-unwise.html