April budget gap narrows sharply from year ago (Reuters)

WASHINGTON (Reuters) – A surge in income tax receipts helped cut the U.S. monthly budget deficit in half in April compared to a year ago, figures issued by the Treasury Department on Wednesday showed.

The budget deficit came in at $40.5 billion in April, compared with an $82.7 billion shortfall in April 2010, the Treasury said.

But the relatively favorable data didn't change the picture of an economy heading deeper in debt and just days away from a May 16 deadline for hitting a legally set ceiling on government borrowing.

For the first seven months of fiscal 2011, which ends September 30, the cumulative deficit swelled to $869.9 billion from $799.7 billion in the comparable year-earlier period.

The deficit figures are a somber backdrop for the ongoing effort by the Obama administration to reach agreement with Capitol Hill lawmakers on a course of action for slashing the deficit.

The White House said President Barack Obama will get involved directly this week in trading ideas with lawmakers on the problem but said he won't be negotiating with them. Republicans and even some Democrats want the administration to be more aggressive in cutting spending.

Adding urgency to the talks is next Monday's projected deadline for hitting a $14.294 trillion debt ceiling, which caps the amount the country can legally borrow. Republicans want the administration to agree to deep spending reductions as a price for agreeing to raise the limit.

In April, the budget report shows government spending rose to $330 billion from $328 billion in April 2010 and for the first seven months of the fiscal year it was up to $2.179 trillion from $1.999 trillion a year earlier.

On the income side, receipts in April rose to $289.5 billion from $245.3 billion. Within that category, individual income tax receipts rose strongly to $155.6 billion from $107.3 billion in April 2010 -- possibly a sign of an improving job market in a strengthening economy though Treasury offered no explanation.

Corporate income tax receipts in April gained to $25.1 billion from $23.1 billion in April last year, less striking than the increase in individual income tax receipts but nonetheless on the same upward trend.

April 18 was this year's filing deadline for individuals to pay their 2010 income taxes and April is typically a strong month for receipts. The April receipts number, for example, was triple the government's $52.8 billion take in March.

The Congressional Budget Office, Congress's watchdog agency, forecasts that for all of fiscal 2011 the government will post a staggering $1.4-trillion budget deficit -- a gap between spending and income that must be met by borrowing for purposes from paying for wars to doling out pensions.

Merely paying interest owed on publicly held government debt -- much of it to overseas investors -- cost $139.3 billion in April. That was up from $123.1 billion in April 2010.

(Reporting by Glenn Somerville, editing by Neil Stempleman)

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Pace of foreclosures slowed further in April (AP)

LOS ANGELES – Fewer Americans had their homes repossessed by banks or were put on notice for being behind on their mortgage payments in April compared to a year ago.

That would ordinarily suggest improving fortunes for U.S. homeowners, but the decline had less to do with any turnaround in the housing market than with foreclosure processing delays that appear to be getting worse. That is threatening to drag out a housing recovery, foreclosure listing firm RealtyTrac Inc. said Thursday.

It's taking longer for lenders to move against homeowners who have stopped paying their mortgage and to take back homes already in some stage of the foreclosure process. In states like New York, for example, it now takes an average of more than two years for a home to go from the initial stage of foreclosure to being repossessed by a bank, the firm said.

Those delays, partly due to banks working through foreclosure documentation problems that came to light last fall, means it could take many more years for lenders to deal with a backlog of seriously delinquent properties, which numbers up to 3.7 million, by some estimates.

"It's going to take between three to four years just to get those loans into foreclosure at our current pace," said Rick Sharga, a senior vice president at RealtyTrac. "And that doesn't spell good news for the housing market."

Banks repossessed 69,532 homes last month, down 5 percent from March and down 25 percent compared with April of last year, according to RealtyTrac, which tracks warnings sent to homeowners throughout the foreclosure process.

The number of properties receiving an initial notice of default fell to 63,422, down 14 percent from March and down 39 percent from April, 2010.

Homes scheduled for auction for the first time also declined in April, falling to 86,304. That's down 7 percent from March and 37 percent below April of last year.

A weak housing market, sliding home prices and pressure on lenders to give troubled homeowners more time to work out new payment arrangements or loan terms have all contributed to the longer time frame for foreclosures.

Many banks also have taken steps to revisit thousands of foreclosure cases since last fall, delaying the processing of new foreclosures. The logjam has been compounded by court delays in states like Florida, New York and New Jersey, where foreclosures must be approved by a judge.

In the first three months of this year, it took an average of 400 days for a U.S. home to go from receiving an initial notice of default to being foreclosed on, RealtyTrac said.

That's up from an average of 340 days in the same period last year and more than double the 151-day average in the first quarter of 2007.

The delays are even lengthier at the state level. In New York and New Jersey, the foreclosure process took more than 900 days, on average, to run its course in the first quarter — more than three times the average length of time in the first quarter of 2007 for both states.

In Florida, one of the states hardest hit by the foreclosure crisis, the process took an average of 619 days in the first quarter, up from 470 days a year earlier. In the first quarter of 2007, it took an average of 169 days for the process to play out, RealtyTrac said.

Barring a pickup in the pace of foreclosures, it is likely fewer homes will be repossessed this year than in 2010, when lenders took back more than a million, Sharga said.

Despite the drop in foreclosure activity last month, several states continue to have outsized foreclosure rates.

Nevada had the highest foreclosure rate in the nation, with one in every 97 households receiving a foreclosure notice in April. It also bucked the overall national trend, as bank repossessions jumped 23 percent from March and climbed 12 percent from April of last year, RealtyTrac said.

Lenders may have elected to pick up the pace of foreclosures in Nevada to take advantage of brisk foreclosure sales in Las Vegas. In March, sales of previously occupied homes in Las Vegas hit a five-year high, with distressed properties accounting for 69 percent of sales, according to DataQuick.

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