Foreclosure Activity at Lowest Level Since 2005

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Foreclosure starts continued to trend downward in the third quarter, according to the latest U.S. Foreclosure Market Report from ATTOM Data Solutions.

Mortgage lenders started the foreclosure process on 78,394 properties in the third quarter, a decrease of 8% compared with the second quarter and down 15% from the third quarter of 2018.

It was the 17th consecutive quarter that foreclosure starts decreased on a year-over-year basis.

Counter to the national trend, 14 states posted a year-over-year increase in foreclosure starts, including Montana (up 33%); Georgia (up 32%); Washington (up 16%); Louisiana (up 15%); and Michigan (up 12%).

Also counter to the national trend, 66 of 220 metropolitan areas posted a year-over-year increase in foreclosure starts, including Atlanta, Ga. (up 37%); Columbus, Ohio (up 27%); San Antonio, Texas (up 24%); Portland, Ore. (up 22%); and Tucson, Ariz. (up 21%).

Looking just at September, 24,453 properties started the foreclosure process nationwide, down 12% compared with August and down 15% compared with September 2018.

September marked the eighth consecutive month with a year-over-year decrease in foreclosure starts.

Bank repossessions increased slightly during the third quarter compared with the second quarter. Lenders repossessed 34,432 U.S. properties through foreclosure (REO), up 6% compared with the second quarter but down 33% compared with a year earlier.

Counter to the national trend, 16 states posted quarter-over-quarter decreases in REO activity, including Maryland (down 37%); Tennessee (down 19%); Delaware (down 16%); New Jersey (down 13%); and Arizona (down 11%).

When looking at all foreclosure actions – default notices, scheduled auctions or bank repossessions – combined, a total of 143,105 properties had foreclosure filings in the third quarter, down 6% compared with the second quarter and down 19% compared with the third quarter of 2018.

That’s the lowest level since the second quarter of 2005 – a more than 13-year low.

“Foreclosure activity continues to decline across the country, which is a good sign that the housing market and the broader economy remain strong – and that the lending excesses that helped bring down the economy during the Great Recession remain a memory,” says Todd Teta, chief product officer at ATTOM Data Solutions. “This is not to say that everything in the latest foreclosure picture is rosy. Some states have seen their foreclosure rates increase this year, which could cause some concern. But overall, the foreclosure numbers reflect a market in which buyers can afford their homes and lenders remain careful in loaning to home buyers who have little chance of repaying.”

Although it would be logical to assume that foreclosures are taking less time to complete, due to the low level of foreclosure activity, that it not the case. The report shows that the average number of days to complete a foreclosure actually increased in the third quarter. 

It took an average of 841 days, up from 716 days in the second quarter to complete a foreclosure – that’s up from 713 days in the third quarter of 2018 to reach the highest level since the fourth quarter of 2017.

States with the longest average foreclosure timelines in the third quarter included Indiana (1,633 days), Hawaii (1,626 days); Nevada (1,511 days), New Jersey (1,173 days) and Georgia (1,170 days).

States with the shortest average foreclosure timelines included Virginia (201 days), Montana (217 days), Mississippi (229 days), Alaska (258 days) and Oregon (283 days).

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