Rise forecast in housing foreclosures, but Phila. area mostly unscathed

The number, though not unexpected, is still staggering: 1.2 million U.S. homes likely will be repossessed by lenders this year, 20 percent more than in 2010, RealtyTrac of Irvine, Calif., which tracks foreclosures nationwide, reported Thursday.

Not unexpected because in September, many lenders - including the nation's seven largest - called a halt to foreclosures in process after questions arose about document handling and so-called "robo-signing." At the time, RealtyTrac economist Rick Sharga said the gaffes would probably delay foreclosures 60 to 90 days, and "once that's done, we'll probably see an escalation of . . . activity."

But while those prospective 1.2 million repossessions - and the one million homes taken back last year - represent real pain to homeowners in dire financial straits even as the economy is righting itself, some observers say the 2011 number doesn't signify a new housing apocalypse, either.

Economist Patrick Newport of IHS Global Insight in Lexington, Mass., said foreclosures were likely to remain horribly high for a year or two because so many homes - 23 percent nationally - are deeply underwater, meaning that more is owed on them than they are worth.

"Is the worst behind us? I think it is. The Fed and RealtyTrac do not," Newport said. "My gut tells me they are too pessimistic."

Some lenders have been holding off on repossessions and subsequent sales of those properties, said economist Kevin Gillen of Econsult Corp. in Philadelphia, because "workouts and loan modifications are typically less costly to the lender than foreclosure, and further auctions will only increase already bloated inventories of homes for sale."

In a normal year, "around 500,000 properties received foreclosure filings nationwide - what we saw in 2005 - compared to 2.9 million in 2010," RealtyTrac spokesman Daren Blomquist said.

In 2005, that was 0.58 percent of all U.S. housing units. In 2010, it was 2.23 percent of all units.

Pennsylvania, which has maintained one of the lowest foreclosure rates since the housing bubble burst in 2006, will share some of that pain. But "we won't see the situation become severe enough to put it in the top 10" among the states, Blomquist said. Even though foreclosure filings in Pennsylvania rose 15 percent from 2009 to 2010, it still ranks 36th nationwide.

In 2003, Pennsylvania had a foreclosure rate of 0.85 percent, eighth among states, according data from the Mortgage Bankers Association. Today, the rate is 0.93 percent.