SOURCE: Los Angeles Times

The number of U.S. foreclosure hit a record high in the second quarter despite a rise in the number of short sales and loan modification efforts, according to data to be released Thursday.

This growing supply of lender-owned properties could set back the nation’s housing recovery but probably won’t sink it completely if the nation’s employment situation doesn’t deteriorate further and the economy begins to pick up steam, experts said. Sales of homes have faltered nationally in recent months with the expiration of government tax incentives for buyers.

U.S. bank repossessions increased 38% in the second quarter from the same period a year earlier for a record total of 269,952, according to Irvine research firm RealtyTrac. That was also a jump of 5% from the previous quarter. If that pace continues through the year, the number of homes taken by banks is likely to top 1 million by the end of 2010, said Rick Sharga, RealtyTrac senior vice president.

“It is almost a certainty that we will see over a million over the course of the year, and that would definitely be a record,” he said. “It’s serious, but it doesn’t appear to be that these levels will crater the housing market if the economy at least stabilizes and we do start to see some job creation.”

A total of 895,521 foreclosure notices were filed on U.S. properties during the second quarter, an increase of less than 1% from the same quarter a year earlier and a 4% decrease from the first quarter, according to RealtyTrac. Notices of default — the first stage of the foreclosure process — were down 19% from the same quarter a year earlier and 11% from the first quarter.

“What is happening is that the number of loans that are going into delinquency is abating, but the number of loans that are moving through the foreclosure process is rising,” said Mark Zandi, chief economist for Moody’s Economy.com. “This is because many loans got piled up in the foreclosure process as mortgage servicers tried to figure out all the various loan modification plans and policy efforts to mitigate foreclosure activity. Now, at this point, servicers are figuring out these programs and are starting to push loans through the process.”

Because housing has stabilized and banks have improved their financial positions since the start of the financial crisis, regulators are pressing them to get rid of their troubled loans.

“There is growing pressure on the banks to get problem residential loans worked out one way or another,” said Bert Ely, an independent banking consultant. “And the sense is that, in most markets, we are through the worst of it to the extent the economy improves at all.”

California homes received a total of 192,422 foreclosure filings in the second quarter, a 24% decrease from the same quarter a year earlier and an 11% drop from the first three months of the year. Notices of default were down 43% from the same quarter a year earlier and 15% from the first three months of the year.

California also appears to be bucking the trend in bank seizures, with that number up only 1% at the end of the second quarter from the year-earlier quarter and down 1.5% from the first quarter. That relatively moderate increase in home seizures in the Golden State is probably because banks are purposely postponing the auctions of homes to keep a flood of properties off the market, Sharga said, and will not last forever.

“California might be too saturated, in terms of what the banks are willing to put on their books right now,” he said. “You will definitely see it coming later.”

“Because of how out of control the prices and lending practices got during the boom, and now because of high levels of unemployment, California is probably going to be at the center of the foreclosure crisis until it’s over,” Sharga said.

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MY TAKE: I know Phoenix AZ foreclosures  are not going away anytime soon.  I see ads online every day for Phoenix homebuyers who are interested in buying foreclosures.  And, there’s no shortage either of the number of homes on the market that are being offered on a short-sale basis.  I have a friend who actually just bought Costa del Sol real estate on short sale, even though that property is thousands of miles away off the coast of Spain, where they are also now having a financial crisis of their own.  I’m told Andalucia homes there will be on the auction blocks just like those out here in the US, and that foreclosure numbers we’ve been getting used to hearing about at home are beginning to make the headlines overseas.

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OTHER RESOURCES

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Did you ever imagine and efficient gas furnace providing energy to your home while it is heating it?  Well, the North American market today is in for a new reality from Marathon engine.  Generating electricity produces enormous amounts of heat that is typically wasted when it goes right at the chimney.  Now there is cogeneration or “Combined Heat and Power” systems that make use of that otherwise wasted heat to warm buildings and homes.  Several Con-Edison plants in the vicinity of Manhattan help to heat Manhattan’s buildings.  It’s brilliant solution will help urban areas to improve energy efficiency.  Although, it does not work as good in less urban areas.  Typically, there are still people who use their own natural gas to heat their homes.

But what if you could reverse the cogeneration idea? Imagine taking an already efficient gas furnace and generating a home’s electricity directly from it, while it heats?

That is the reality that Marathon Engine has in store for the North American market today. While not quite a start-up (they have been selling units in Europe for 5 years), the company’s “EcoPower MicroCHP” units look set to sell well, despite, or perhaps because of the economy downturn.

The EcoPower unit is not only capable of generating all of a sizable home’s heating and electric needs – it can also sell excess generation back to a utility (assuming Net Metering is legal and in place). The larger the home, the better the payback which makes the system particularly suited for multi-family buildings and small businesses with strong heating needs. It is also best used in cold climates where heat is required for most months of the year – you will not find much use for it in Phoenix.

As for greenhouse gases, the company claims (see PDF here) to offer a 65% reduction in CO2 emissions vs a coal powered equivalent. In reality, it is very difficult to measure the reduction because there are so many factors that might go in to what the device replaces and what kind of heating and electric demand is called for.

On the other side of the coin, EcoPower is not cheap.  The average person will not have $35,000 laying around to purchase.  However, for larger homes, the device could possibly pay for itself in about a half a dozen years or so.  If it works, despite the cost, with a high energy prices, economics of scale will probably bring the equal power within reach for many people.  Housing developers, of course, could very possibly start incorporating EcoPower into their building plans of houses and then the cost would be easier for people to afford because it would be spread out over the life of the mortgage.

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My Take: This is fantastic!  However, it is not a new idea.  People in cold country have been doing something similar to this for years.  I know several people that take their dryer exhaust from their dryers and aim it into their heating vent system to save money on heating during winter.  It works expiration point

The idea to take that extra heat and create energy makes the same idea even better.  Those people that do this could easily use that same heat to run their dryer.  Therefore, it is a fantastic idea!  It is even better that it cuts down on the CO2 emissions in the air, we get enough of that from the cars and trucks on the road.

Now if they could just manage to use the heat in the summer in Phoenix to do the same thing they are doing with this equipment, they would really have something then.  This year it has been running right at 115° the day for almost a month.  That means you could fry eggs on the sidewalk.  Why can’t someone create something to capture that he and create clean energy?

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