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2011 to top 2010 record of 1 million foreclosures

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., which predicted that 1.2 million homes will be repossessed this year.

The blistering pace of foreclosures this year will top 2010, when a record 1 million homes were lost, RealtyTrac said Thursday.

One in every 45 U.S. households received a foreclosure filing last year, a record 2.9 million of them — up 1.67 percent from 2009.

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

The average rate on the 30-year mortgage dropped to 4.71 percent from 4.77 percent the previous week. The rate on the 15-year loan, a popular refinance choice, slipped to 4.08 percent from 4.13 percent. 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 percent and the 15-year mortgage rate fell to 3.57 percent, 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 indices from the Mortgage Bankers Association.

It will take more than low mortgage rates to jump-start a housing market plagued by high unemployment, falling prices, and 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. Foreclosure rates 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 who are severely behind on their payments after allegations of improper eviction surfaced in September; however, most banks have since resumed foreclosures and the first quarter likely will bear that out, Sharga said.

The pain likely will be the most acute in states that already suffered the worst. For the most part, states that saw the biggest housing booms will be the hardest hit: Nevada, Arizona, Florida and California. They will be joined by states hit hardest by the economic downturn, including Michigan and Illinois. More than half of the country’s foreclosure activity came out of five states in 2010: California, Florida, Arizona, Illinois and Michigan, which together 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. Arizona and California also showed sharp December increases in the number of homes reclaimed by banks, at 52 percent and 47 percent, respectively. Arizona and Florida finished the year at No. 2 and No. 3 for the highest rates of foreclosure.

California, Utah, Georgia, Michigan, Idaho, Illinois and Colorado rounded out the top 10 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.