Foreclosure (© Rick Wilking/Reuters)

Foreclosure prevention efforts and moratoriums by banks and government institutions failed to stem the nation's foreclosure problem in February. Foreclosure filings were reported on 290,631 properties during the month, a 30% increase from February 2008, and a 6% increase from January, according to foreclosure listings firm RealtyTrac.

It was the third-highest monthly total since RealtyTrac began tracking foreclosures at the beginning of 2005, trailing the sharp spikes in delinquencies in August and December of last year. (RealtyTrac is a partner of MSN Real Estate.) The RealtyTrac report echoed news last week by the Mortgage Bankers Association that a record 11% of all mortgages were either behind in payments or in foreclosure in the fourth quarter of last year — the highest number since it began tracking foreclosure data in 1972, and the largest quarter-over-quarter surge in mortgage delinquencies.

These days, rising unemployment — not just problem loans — is driving the surge, says Rick Sharga, RealtyTrac senior vice president, as delinquency rates outpace the overall rate of foreclosure activity. "This month's report is the first time we've seen specific evidence of this," Sharga says, noting that economically hard-hit Oregon, Illinois and Idaho moved into the top 10 – a first for Illinois and Idaho. "All three (increases in foreclosure activity) appear to be due to unemployment-related activity."

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Unemployment was similarly singled out as a leading foreclosure factor by Jay Brinkmann, the MBA's chief economist, in a statement last week. "The delinquency rates continue to climb across the board for prime fixed-rate and subprime fixed-rate loans, loans whose performance is driven by the loss of jobs or income rather than changes in payments," he said.

In January, jobless rates rose in 49 states and the District of Columbia compared with the prior month, and all had increases over the previous year, according to the U.S. Labor Department. Hardest hit were states in the West and Midwest where manufacturing, construction and retail employment has cratered.

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Nevada, Arizona, California still lead in foreclosures
Nevada posted the highest foreclosure rate in the U.S., with one in every 70 homes receiving a filing. It was followed by Arizona, with one in every 147, and California, with one in every 165.

Nevada's total filings — from notice of default to bank auction — on 15,783 homes represent a 158% increase from February 2008 and a 9% spike from the previous month.

Arizona's notices on 18,119 properties represent an 88% increase from last year and a 23% increase from the previous month.

California's filings on 80,775 properties register as a 51% increase from last year and a 5% increase from January.

An ugly March?
With many foreclosure stays ending this month and unemployment on the rise, Sharga expects to see a significant spike in foreclosures for March. Foreclosure relief outlined recently by President Barack Obama probably won't begin to affect this rate for months, analysts say.

And even then, Sharga says, it's hard to tell how many homeowners would qualify for the relief, given included limits on how much homeowners can be "underwater" on their home and the uncertainty surrounding securitized loans.

All of this has Sharga expecting that the peak of this foreclosure crisis won't happen until the second or third quarter. "It's difficult to tell when the bottom is going to be," Sharga says. "But I think we can see it from here."

States ranked by February 2009 foreclosure rates

Rate RankState NameTotal% chg. from Jan. '09% chg. from Feb. '081 per X households (rate)
1Nevada15,7839.27155.93            70 
2Arizona18,11923.4887.76          147 
3California80,7755.2350.62          165 
4Florida46,39113.7942.97          188 
5Idaho1,76416.67129.39*          358 
6Michigan12,56410.0414.67          360 
7Illinois14,218-1.5962.34          369 
8Georgia10,1852.8133.47          389 
9Oregon3,608-20.02127.78          446 
10Ohio11,2310.298.14          451 
11Colorado4,219-2.41-37.38          504 
12Utah1,8050.7840.14          513 
13Indiana4,406-3.29-14.4          631 
14Connecticut2,22034.461          648 
15Virginia4,823-10.1215.19          679 
16Maryland3,176-14.09-20.92          730 
17Tennessee3,6910.79-25.57          738 
18Arkansas1,6166.616.01          797 
19New Hampshire739-1.4714.93          804 
20South Carolina2,4730.41254.30*          818 
21Missouri3,12926.73-9.8          846 
22Wisconsin2,98610.6324.78          857 
23Minnesota2,57436.4863.84          895 
24Texas10,5277.92-14.14          896 
25Washington3,021-3.7936.08          908 
26Massachusetts2,940-12.55-24.73          926 
27Hawaii53759.35275.52          944 
28Kansas1,17176.09156.8       1,041 
29New Jersey3,279-34.49-41.43       1,067 
30Rhode Island409-45.1-8.3       1,102 
31Pennsylvania4,19213.8573.58*       1,307 
32Alaska20321.5637.16       1,390 
33Delaware27356.919.74       1,424 
34Oklahoma1,0305.86-42.49       1,576 
35New York4,30123.03-17.97       1,846 
36North Carolina2,039-14.54-49.68       2,023 
37Iowa579-14.4822.41       2,296 
38New Mexico373127.44-25.99       2,311 
39Maine261-15.2628.57       2,669 
40Louisiana67839.794.31       2,742 
41Wyoming81-2.4126.56       2,992 
42Alabama713-22.50.99       2,997 
43Kentucky598-10.8825.63       3,187 
44Mississippi2946.9198.65*       4,268 
45West Virginia11150184.62       7,952 
46Montana5410.2-70.17       8,065 
47North Dakota37-28.8568.18       8,393 
48South Dakota32-17.9523.08     11,164 
49Vermont1183.33175.00*     28,312 
50Nebraska13-58.06-94.37     60,062 
 District of Columbia37983.0911.47          750 
 U.S. 290,631 5.9229.95       440
*Actual increase may not be as high due to data collection changes or improvements