ATTOM: Foreclosure Activity Now Below Pre-Recession Levels

Lenders started the foreclosure process on 91,849 U.S. properties in the third quarter, a decrease of 6% compared with the second quarter and down 3% compared with the third quarter of 2017, according to ATTOM Data Solutions.

It was the 13th consecutive quarter with a year-over-year decrease in foreclosure starts.

Counter to the national trend, 15 states posted year-over-year increases in foreclosure starts, including Michigan (up 32%), Florida (up 25%), Maryland (up 13%), Missouri (up 10%) and Texas (up 3%).

Also counter to the national trend, 79 of 219 metropolitan areas (36%) posted a year-over-year increase in foreclosure starts, including Detroit, Michigan (up 65%); Houston, Texas (up 51%); Miami, Florida (up 29%); Los Angeles, Calif. (up 2%); and Washington, D.C. (up 2%).

Bank repossessions also dropped to record low nationwide in the third quarter. Lenders repossessed 51,459 properties – down 24% from the previous quarter and down 8% from a year earlier to reach the lowest level since ATTOM began tracking in the second quarter of 2005.

Counter to the national trend, the District of Columbia and 17 states posted year-over-year increases in REO activity, including Georgia (up 56%), Missouri (up 27%), Texas (up 21%), New Jersey (up 4%) and New York (up 3%).

In all, there were 177,146 U.S. properties with foreclosure filings – default notices, scheduled auctions or bank repossessions – in the third quarter.

That’s down 6% from the previous quarter and down 8% from a year earlier to reach the lowest level since the fourth quarter of 2005 – a nearly 13-year low.

ATTOM further points out that foreclosure activity in the third quarter was 36% below the pre-recession average of 278,912 properties with foreclosure filings per quarter between the first quarter of 2006 and the third quarter of 2007.

It was the eighth consecutive quarter where U.S. foreclosure activity has registered below the pre-recession average.

“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,” says Daren Blomquist, senior vice president at ATTOM Data Solutions. “Average foreclosure timelines have dropped to a two-year low, and the share of foreclosures tied to 2004-to-2008 loans has dropped well below 50 percent.

“The biggest foreclosure risk in today’s housing market comes from natural disaster events such as the twin hurricanes of a year ago,” Blomquist adds. “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.”

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