US foreclosure filings surpassed 300,000 for the third straight month in May and may hit a record 1.8 million by the first half of the year, RealtyTrac Inc. said.

A total of 321,480 properties received a default or auction notice or were repossessed last month, up 18 percent from a year earlier, the Irvine, California-based seller of default data said on Thursday in a statement. One in 398 US households received a filing last month.

“The foreclosure bucket is filling faster than it’s emptying,” Jay Brinkmann, chief economist of the Washington-based Mortgage Bankers Association, said in an interview. “It will continue through next quarter at least.”

Job losses and falling property prices are delaying the housing recovery as more homeowners are unable to pay the mortgage or have difficulty selling or refinancing. The unemployment rate climbed to 9.4 percent in May, the highest since 1983, the labor department said last week. Prices in 20 US cities dropped 18.7 percent in March, according to the S&P/Case-Shiller home-price index.

More home loans originated in 2005 or before are likely to default as unemployment climbs, said Rick Sharga, executive vice president for marketing at RealtyTrac.

A record 1.37  percent of all loans entered the foreclosure process in the first quarter, with 29 percent tied to borrowers with prime, fixed-rate mortgages, the MBA reported on May 28. Homes in foreclosure totaled 3.85 percent of all loans in the quarter, up from 2.47 percent a year earlier, MBA said.

“The numbers are getting bigger and that’s what is bothering me,” said Patrick Newport, economist at IHS Global Insight in Lexington, Massachusetts. “You have banks holding these toxic loans, which means bank balance sheets are in even worse shape with the increase in delinquencies.”

Additional US home foreclosures will probably total 6.4 million by mid-2011, and inventories of foreclosed homes awaiting sale will probably peak in mid-2010 at about 2 million properties, JPMorgan Chase & Co. analysts led by John Sim wrote in a June 5 report. US prices will likely drop 39 percent on average, they said.

The May total was the third-highest in RealtyTrac records dating to January 2005.

Nevada had the highest foreclosure rate, one in every 64 households, more than six times the national average. California ranked second at one in 144 households.

Florida had the third-highest rate at one in 148 households. Arizona ranked fourth with one in 158 and Utah was fifth with one filing per 316 households, RealtyTrac said.

Other states among the top 10 highest rates were Michigan, Georgia, Colorado, Idaho and Ohio.

California had the highest total number of filings at 92,249, 23 percent more than a year earlier. Scheduled auctions rose 18 percent from the previous month while bank seizures fell 1 percent and defaults fell 18 percent.

Florida had the second-highest total with 58,931 filings, up 50 percent from May 2008. Nevada was third with 17,157 filings, up 83 percent, as bank seizures there rose 23 percent from the previous month.

Arizona, Michigan, Ohio, Illinois, Georgia, Texas and Virginia rounded out the top 10, which accounted for 77 percent of total US filings, according to RealtyTrac.

New Jersey had the 24th highest rate, one in 794 households, and 4,408 filings. Connecticut ranked 33rd, with one in every 1,301 households in some stage of default. The state had 1,106 filings. New York was 37th, with one in 1,646 households getting a filing for a total of 4,825.

Las Vegas had the highest foreclosure rate among metropolitan areas with a population 200,000 or more. One in 54 households got a notice, up 78 percent from a year earlier and up 4 percent from the previous month.

California had six cities among the top 10. Stockton, Modesto, Riverside-San Bernardino and Merced ranked second through fifth, respectively, Bakersfield was seventh and Vallejo-Fairfield was ninth.

Florida had three cities in the top 10: Cape Coral-Fort Myers ranked sixth, Orlando-Kissimmee was eighth and Miami-Fort Lauderdale-Pompano Beach was tenth, according to RealtyTrac, which collects data from more than 2,200 counties representing 90 percent of the US population. (Bloomberg)

National overhauls of banking and market rules in response to the financial crisis have set back plans by world leaders to create common standards, regulators and industry officials say.

The United States, European Union (EU) and Japan have imposed new rules on banks and investors in response to the turmoil, in some cases undoing years of work to build up global standards, officials said at a conference of the International Organization of Securities Commissions (IOSCO) in Tel Aviv this week.

“It will be difficult once the crisis is over to start again with a coherent system of international cooperation,” said Eddy Wymeersch, chairman of the EU’s Committee of European Securities Regulators and supervisory board chairman of the Belgian Banking, Finance and Insurance Commission, in an interview in Tel Aviv.

The single-country responses delay not only initiatives to develop uniform rules pledged by world leaders at the Group of 20 summit in London on April 2. They also complicate efforts by regulators to guard against financial disruptions such as the US subprime-mortgage collapse that triggered the credit crunch.

Also at stake is the ability to build consistent rules desired by the global financial industry.

“We desperately would like to see convergence of rules around the world,” Goldman Sachs Group Inc. chief executive officer Lloyd Blankfein said at the conference yesterday.   

The differences include divergent approaches between the United States and EU—the world’s two largest economic blocs—to regulating bank capital, hedge funds and credit-rating companies such as Moody’s Investors Service and Standard & Poor’s, regulators and industry executives say. Japan, the United States and Europe have also have imposed varying restrictions on short-selling.

“Everyone knows that we have to cooperate as closely as possible, because of contagion,” said Hans Hoogervorst, head of Dutch financial regulator AFM and vice chairman of IOSCO’s main standard-setting body, the Technical Committee. “This is a more serious problem than the H1N1 flu that came from Mexico,” he said in an interview at the conference.

The financial crisis, which started with the collapse of the US property market in 2007, has triggered more than $1.46 trillion of writedowns and credit losses at banks and other financial institutions and sent the global economy into its first recession since World War II, according to data compiled by Bloomberg.

The turmoil that arose two years ago has slowed a drive between 2005 and 2007, when many countries adopted Basel II global banking standards and international accounting standards took hold in more than 100 countries. US regulators meanwhile were moving toward applying the global rules.

“We have lost a little bit of momentum and we will have to start it over again,” Wymeersch said. As a result, he said, business “is going to be more costly. If you want to do capital raising it will be more costly. If you want to establish banks, you have duplication of supervision, and so on.”

Since the credit crunch, the EU has proposed bank-capital revisions ahead of the Basel, Switzerland, committee that writes banking rules. US policy makers also have forced through changes to accounting rules, that some say are out of sync with a review by the international standard-setters.

“Progress in global convergence in regulatory standards has ground to a halt,” Richard Britton, a consultant on regulatory issues to the International Capital Market Association, said in an interview in Tel Aviv. “The hope must be that, as the world economy recovers from the crisis,” the momentum from 2005-2007 “will be regained.”

To get back on track, the G-20 has called on the Financial Stability Board of central bankers and finance ministers to coordinate efforts to stiffen regulations for banks, hedge funds, and other parties.

“Whatever we do, no matter how we design future regulation, we will continue having a level playing field,” Mario Draghi, FSB chairman and governor of the Bank of Italy, said at the conference on Wednesday. “That’s the most important thing and it’s the thing that’s most in danger right now.” (Bloomberg)

Japan’s economy shrank less than the government initially estimated as business investment and inventories fell at a slower pace.

Gross domestic product shrank at a record 14.2-percent annual pace in the three months ended March 31, less than the 15.2-percent reported last month, the Cabinet Office said on Thursday in Tokyo. The median forecast of 23 economists surveyed by Bloomberg News was for a 15 percent contraction.

The decline may represent the low point for an economy forecast to expand this quarter as demand from China helps stabilize exports and leaner inventories allow manufacturers to increase output. Still, with factories sitting idle and profits falling, companies are slashing investment and jobs, casting doubt on whether the revival will last.

“The revised report confirms that the first quarter was disastrous, but the worst for the economy has already passed,” said Junko Nishioka, a senior economist at RBS Securities Japan Ltd. in Tokyo. “But a rebound doesn’t guarantee that Japan’s economy will regain momentum.”

The yen traded at 98.03 per dollar at 10:50 a.m. in Tokyo from 98.20 before the report was published. The Nikkei 225 Stock Average fell 0.3 percent to 9,958.98 after touching 10,000 for the first time in eight months. The gauge has climbed 42 percent since tumbling to a 26-year low on March 10.   

Fourth-quarter GDP was revised to a 13.5-percent decline from 14.4 percent, Thursday’s report showed. That’s still the worst contraction since the government began keeping records in 1955.

Capital spending fell 8.9 percent compared with a preliminary 10.4 percent, while inventories shaved 0.2 percentage point from GDP, compared with an earlier estimate of 0.3 point. Exports fell 26 percent, unchanged from the initial reading.

The recession has shown signs of easing since then. Japan’s manufacturers have benefited from revived demand in China, where the government is spending $586 billion on roads, hospitals and housing. Exports and factory production increased in March and April on a month-on-month basis.

Japanese Prime Minister Taro Aso’s record stimulus spending that includes loan guarantees for smaller businesses, cash handouts to households and incentives for buying cars and appliances are starting to work.

Consumer confidence rose to a 10-month high in April. Sales of electronics are by up about 20 percent since the government last month introduced a program to encourage consumers to buy eco-friendly products, according to Tokyo-based researcher Gfk Marketing Service Japan Ltd. Tax breaks on energy-efficient vehicles helped Honda Motor Co. post higher sales in the last two months. Bankruptcies fell last month for the first time since last April.

Even as bright signs emerge, manufacturers are only using about half their productive capacity because of the collapse in global demand. Exports and production have fallen by more than a third from last year’s levels and managers are under pressure to cut jobs and delay investments, which could cause the economy to start shrinking again as the effects of the stimulus wanes.

“After the fourth quarter, the outlook gets very uncertain,” said Hiromichi Shirakawa, chief economist at Credit Suisse Group AG in Tokyo. “In the short term, the stimulus package will have a fairly visible impact on GDP, but it’s only for this year.”

Machinery orders, an indication of capital spending in three to six months, slid to a 22-year low in April, a report yesterday showed.

Dearth of demand for Japan’s products and services has started to weigh on prices, sparking concern the economy may slip back into the kind of deflationary malaise that caused wages to fall by about 10 percent in the decade through 2005. Workers at the country’s biggest companies will have their summer bonuses cut by a record 19.4 percent this year, according to a survey by business-lobby Keidanren.

Cost-cutting drives by manufacturers including Konica Minolta Holdings Inc. will chip away at wages and may cause job losses to accelerate. Economists surveyed by Bloomberg expect the unemployment rate will rise next year to an unprecedented 5.7 percent from the current 5 percent.

Konica Minolta, a maker of parts for liquid-crystal displays, last week said it will cut jobs and reduce spending on research in order to offset falling revenues.

“The underlying price trend for the economy has turned negative and that’s going to be very hard to turn around,” said Richard Jerram, chief economist at Macquarie Securities Ltd. in Tokyo. “For six months things are going to improve very quickly based on pure inventory-related adjustments, and then after that they’ll improve rather more slowly. But you’re going to have deflation eroding the growth rate.”  (Bloomberg)