Foreclosure filings rise 18% in May, but annual pace eases; Washington state ranks 18th in nation

WASHINGTON — The number of U.S. households on the verge of losing their homes to foreclosure is still rising, but the annual increase in May was the smallest in nearly three years.

Foreclosure filings rose nearly 18 percent in May compared with the same month last year, foreclosure listing firm RealtyTrac said Thursday. It was the smallest yearly gain since June 2006, and a 6 percent decline from April.

In Washington state, in contrast, foreclosure filings in May were up 14 percent from April and 48 percent from May 2008.

But the percentage of households in danger of losing their homes here still was lower than the nation as a whole.

Despite the national trend, don't expect a quick end to the foreclosure crisis. Foreclosures are likely to remain elevated this year and into 2010 as layoffs become the main reason that borrowers default on their home loans.

Many economists expect unemployment, now at 9.4 percent nationwide, to rise as high as 10 percent, and some project it will exceed the post-World War II record of 10.8 percent.

More than 321,000 households received at least one foreclosure-related notice in May, according to RealtyTrac's report. That means one in every 398 U.S. homes received a foreclosure filing last month.

In Washington, the figure was one in every 716 homes, in King County one in every 815. Three Washington counties topped the national average: Clark, Cowlitz and Pierce. On a state-by-state basis, Nevada had the nation's highest foreclosure rate in May, with one every 64 households receiving a filing. California took the No. 2 slot previously occupied by Florida. California's rate was one in every 144 households. Florida ranked third with one in every 148 households receiving a foreclosure filing. Washington ranked 18th.

Among large cities, Las Vegas led the way, with one in every 54 households receiving a filing. Four California metropolitan areas — Stockton, Modesto, Riverside-San Bernardino and Merced — were next, followed by Cape Coral-Fort Myers, Fla.; Bakersfield, Calif.; Orlando, Fla.; Vallejo-Fairfield, Calif.; and Miami.

Seattle Times business reporter Eric Pryne contributed to this report.