A total of 191,914 U.S. properties started the foreclosure process in the first six months of 2018, down 8% from the first half of 2017 and down 82% from a peak of 1,074,471 in the first half of 2009, according to the mid-year U.S. Foreclosure Market Report from ATTOM Data Solutions.
However, as usual, there were certain states and metropolitan areas where foreclosure starts “flared up” during the first half.
Counter to the national trend, 22 states posted a year-over-year increase in foreclosure starts in the first half, including Indiana (up 51%); Tennessee (up 13%); Texas (up 11%); Michigan (up 5%); and Arizona (up 1%).
Also counter to the national trend, 88 of the 219 metro areas analyzed in the report (40%) posted year-over-year increases in foreclosure starts, including Minneapolis-St. Paul, Minn. (up 50%); Houston, Texas (up 25%); Detroit, Mich. (up 23%); Dallas-Fort Worth, Texas (up 17%); and Las Vegas, Nev. (up 7%).
A total of 133,290 U.S. properties were repossessed by lenders through foreclosure (REO) in the first half, down 21% from the first half of 2017 and down 75% from a peak of 529,633 in the first half of 2010.
All but one state – New Mexico – posted a year-over-year decrease in REOs in the first half of 2018.
In total, all foreclosure filings – default notices, scheduled auctions and bank repossessions – were down 15% compared with the first half of 2017 and were down 78% from the peak seen in the first six months of 2010.
However, 26 of the 219 metropolitan statistical areas analyzed in the report (12%) posted a year-over-year increase in foreclosure activity in the first half, including Houston, Texas (up 10%); Dallas-Fort Worth, Texas (up 11%); Cleveland, Ohio (up 4%); Phoenix, Ariz. (up 5%); and Indianapolis (up 2%).
“Localized foreclosure flare-ups in the first half of 2018 can no longer be blamed on legacy distress left over from the last housing bubble given that nearly half of all active foreclosures are now tied to loans originated in 2009 or later and given that the average time to foreclose plummeted in the first two quarters of the year,” says Daren Blomquist, senior vice president with ATTOM Data Solutions, in a statement. “Instead these local foreclosure increases are typically the result of more recent distress triggers in those markets.
“We’re also seeing early evidence of gradually loosening lending standards starting in 2014, specifically for FHA-backed loans,” Blomquist adds. “The foreclosure rate on FHA loans originated in 2014 and 2015 has now jumped above the average FHA foreclosure rate for all loan vintages – the only two post-recession vintages with foreclosure rates above that overall average.”
Nationwide 0.27% of all housing units (one in every 370) had a foreclosure filing in the first six months of 2018.
States with the highest foreclosure rates in the first half were New Jersey (0.80%); Delaware (0.57%); Maryland (0.50%); Illinois (0.44%); Connecticut (0.40%), South Carolina (0.39%); Ohio (0.37%); Nevada (0.37%); Florida (0.37%); and New Mexico (0.35%).
Metropolitan areas with the highest foreclosure rates included Atlantic City, N.J. (1.48%); Trenton, N.J. (0.96%); Flint, Mich. (0.95%); Philadelphia, Pa. (0.64%); Columbia, S.C. (0.58%); Cleveland, Ohio (0.58%); Albuquerque, N.M. (0.55%); Rockford, Ill. (0.53%); Peoria, Ill. (0.52%); and Baltimore, Md. (0.52%).
The report shows that as foreclosure activity slows, the average number of days that a property stays in the foreclosure process is starting to fall.
In the second quarter, it took an average of 720 days from the first public foreclosure notice to complete the foreclosure process, down from 791 days in the first quarter and down from 883 days in the second quarter of 2017.
It was the second consecutive quarter with a year-over-year decrease and the shortest average foreclosure timeline since the third quarter of 2016.
States with the longest average foreclosure timelines for foreclosures completed in the second quarter were Hawaii (1,553 days), Florida (1,166 days), New Jersey (1,161 days), Utah (1,108 days) and Indiana (1,054 days).
States with the shortest average foreclosure timelines were Arkansas (152 days), Virginia (169 days), New Hampshire (177 days), Mississippi (188 days), and Minnesota (222 days).