Ten Years Later, Foreclosure Crisis Comes Full Circle
Ten years into what proved to be the worst housing crisis in U.S. history, CoreLogic, Irvine, Calif., says the housing market it beginning to “normalize.”
The report, United States Residential Foreclosure Crisis: 10 Years Later, examines the path of the residential foreclosure crisis beginning with the relatively healthy years early in the 2000s, through the peak of the crisis, to present day.
The report notes the foreclosure crisis began in some parts of the country as early as 2007; economists mark the beginning of the foreclosure crisis with the collapse of two Bear Stearns subprime funds in June 2007 and deepening with the Lehman Brothers bankruptcy in September 2008. The crisis peaked nationwide in September 2010, with nearly 120,000 completed foreclosures occurring during that single month. Since the beginning of 2007, 7.8 million completed foreclosures have taken place nationwide. Beginning in Q2 2004 when homeownership rates peaked, 8.6 million homes have been lost to foreclosure.
CoreLogic noted gradual improvement since then; at the end of 2016, the national foreclosure inventory, which reflects all homes in some stage of the foreclosure process, fell to 336,000, or 0.9 percent, of all homes with a mortgage compared to 1.4 million homes, or 3.3 percent, at the peak of the residential foreclosure crisis in September 2010. The country has started to “normalize,” said CoreLogic Chief Economist Frank Nothaft, recording 22,000 completed foreclosures a month; pre-crisis, foreclosures averaged 21,000 per month.
CoreLogic data corroborate that of the Mortgage Bankers Association’s National Delinquency Survey. The MBA fourth quarter NDS reported the percentage of loans on which foreclosure actions started during the fourth quarter fell to 0.28 percent, a decrease of two basis points from the third quarter and an eight basis points drop from one year ago. This represented the lowest rate of new foreclosures started since fourth quarter 1988. Delinquency rates fell to their lowest levels since 2007.
“The country experienced a wild ride in the mortgage market between 2008 and 2012,” Nothaft said. “As we look back over 10 years of the foreclosure crisis, we cannot ignore the connection between jobs and homeownership. A healthy economy is driven by jobs coupled with consumer confidence that usually leads to homeownership.”
During the housing crisis, CoreLogic also reported the number of mortgages in serious delinquency, defined as 90 days or more past due, including loans in foreclosure or REO. The delinquency rate (payments past due by 30, 60 or 90 days) continues to be a leading indicator of troubled markets. At the end of 2016, 1 million mortgages, or 2.6 percent of homes with a mortgage, were in serious delinquency, compared to the serious delinquency peak of 3.7 million mortgages, or 8.6 percent of homes with a mortgage, were in serious delinquency, in January 2010. In recent years, the decline in serious delinquencies has been geographically broad throughout the country with year-over-year decreases from December 2015 to December 2016 in 48 states and the District of Columbia.
Other key findings:
–The national completed foreclosure total peaked in 2010 with 1.2 million foreclosures for the year; closely followed by just over 1 million completed foreclosures in 2009.
–From the peak in 2010, the completed foreclosures steadily declined each year, dropping by nearly 100,000 completed foreclosures per year through 2016.
–Florida saw the highest percent of mortgages in the foreclosure inventory, during June 2011, with 12.5 percent of homes in some stage of the foreclosure process.
–Of the 10 largest metro areas as measured by population, Miami had the highest percent of all homes with a mortgage in the foreclosure inventory at its peak in February 2011 (19.2 percent).
