ATTOM: Foreclosure Activity at Lowest Level Since 2005

ATTOM Data Solutions, Irvine, Calif., reported 177,146 U.S. properties with foreclosure filings (default notices, scheduled auctions or bank repossessions) in the third quarter, down by 6 percent from the previous quarter and down by 8 percent from a year ago to the lowest level since 2005.

The company’s quarterly U.S. Foreclosure Market Report said foreclosure activity in the third quarter was 36 percent below the pre-recession average of 278,912 properties with foreclosure filings per quarter between Q1 2006 and Q3 2007, marking the eighth consecutive quarter where U.S. foreclosure activity has registered below the pre-recession average.

Earlier this week, CoreLogic, Irvine, Calif., reported foreclosure and mortgage delinquency rates fell to 12-year lows in July. The company’s monthly Loan Performance Insights Report said , nationally, 4.1 percent of mortgages were in some stage of delinquency (30 days or more past due, including those in foreclosure) in July, representing a 0.6 percentage point decline in the overall delinquency rate from a year ago (4.7 percent). The foreclosure inventory rate fell to 0.5 percent, down 0.2 percentage points from 0.7 percent a year ago and the lowest for a July since 2006.

“A decade after poorly underwritten mortgages triggered a housing market crash, it’s clear that the foreclosure risk associated with those problem mortgages has faded,” said Daren Blomquist, senior vice president with ATTOM Data Solutions. “The biggest foreclosure risk in today’s housing market comes from natural disaster events such as the twin hurricanes of a year ago. Foreclosure starts spiked in the third quarter in many local markets impacted by those hurricanes. Secondarily, we are seeing relatively modest–but more widespread–foreclosure risk associated with FHA loans originated in 2014 and 2015.”

The report said lenders started the foreclosure process on 91,849 U.S. properties the third quarter, down 6 percent from the previous quarter and down 3 percent from a year ago, marking the 13th consecutive quarter with a year-over-year decrease in foreclosure starts. Thirty-five states and the District of Columbia saw decreases; 15 states posted year-over-year increases, including Florida, where starts increased by 25 percent; and Michigan (32 percent). Of 219 metro areas analyzed, 79 posted increases in the third quarter, including Houston (up 51 percent), Miami (up 32 percent) and Detroit (up 65 percent).

ATTOM said FHA foreclosure rates for 2014 and 2015 loan vintages registered above the long-term average foreclosure rate for FHA loans, the only two post-recession vintages (2010 and later) above the long-term average. FHA loans originated in 2014 had the highest foreclosure rate of any post-recession loan vintage nationwide, as well as in 31 states and in 63 of 115 metropolitan statistical areas analyzed (55 percent), including New York, Chicago, Dallas-Fort Worth, Philadelphia and Houston.

FHA loans originated in 2015 had the highest foreclosure rate of any post-recession loan vintage in 10 states and in 21 of 115 metropolitan statistical areas analyzed (18 percent), including Atlanta, Miami, San Antonio, Oklahoma City and Memphis.

The report said nationwide, one in every 757 properties had a foreclosure filing in third quarter. States with the highest foreclosure rates were New Jersey (one in every 267 housing units); Delaware (one in every 315); Maryland (one in every 379); Florida (one in every 449); and Nevada (one in every 472). Metros, highest foreclosure rates were in Atlantic City, N.J. (one in every 152 housing units); Trenton, N.J. (one in every 236); Fayetteville, N.C. (one in every 253); Peoria, Ill. (one in every 299); and Philadelphia (one in every 326).

ATTOM said lenders repossessed 51,459 properties through foreclosure in the third quarter, down 24 percent from the previous quarter and down 8 percent from a year ago to the lowest level since ATTOM began tracking in Q2 2005. Properties foreclosed had been in the foreclosure process an average of 713 days, down from 720 days in the previous quarter and down from 899 days a year ago to the lowest level since 2016.