Foreclosure activity has, for all intents and purposes, ground to a halt due to moratoria put in place by the federal, state and local governments and the mortgage forbearance program initiated by the CARES Act, a report from ATTOM Data Solutions shows.
According to the firm’s third quarter U.S. Foreclosure Market Report, there were a total of 27,016 U.S. properties with foreclosure filings – default notices, scheduled auctions or bank repossessions – in the third quarter.
That’s down 12% compared with the second quarter and down 81% compared with the third quarter of 2019.
What’s more, it is the lowest foreclosure rate since the inception of the report in 2008.
For the month of September, there were a total of 9,707 U.S. properties with foreclosure filings, down 2% compared with August and down 80% compared with September 2019.
Rick Sharga, executive vice president of RealtyTrac, an ATTOM Data company, notes that it is “important to remember that the numbers we’re seeing today are artificially low, even as the number of seriously delinquent loans continues to increase, and that we’ll see a significant – and probably quite sudden – burst of foreclosure activity once these various government programs expire.”
Lenders started the foreclosure process on 15,129 U.S. properties in the third quarter, down 15% compared with the previous quarter and down 81% compared with a year earlier.
It was the 21st consecutive quarter with a year-over-year decrease in foreclosure starts, ATTOM says.
States that posted some of the greatest year-over-year decreases in foreclosure starts included Pennsylvania (down 95%); Wisconsin (down 93%); Washington (down 93%); Maryland (down 91%); and Colorado (down 90%).
Among the 220 metropolitan statistical areas analyzed in the report those that posted a year-over-year decrease in foreclosure starts included Washington, D.C. (down 91%); Philadelphia (down 90%); Cleveland (down 89%); Denver (down 89%); and Baltimore (down 88%).
Other markets with at least 1 million people and year-over-year decreases of at least 80% in foreclosure starts in the third quarter were Columbus, Ohio; Detroit; Chicago; Providence, R.I; and Charlotte, N.C.
Nationwide, one in every 5,048 properties had a foreclosure filing. States with the highest foreclosure rates included South Carolina (one in every 2,339 housing units with a foreclosure filing); Illinois (one in every 3,031); New Mexico (one in every 3,079); New Jersey (one in every 3,314); and Delaware (one in every 3,482).
Among 220 metropolitan statistical areas analyzed in the report, those with the highest foreclosure rates included McAllen-Edinburg, Texas (one in every 1,134 housing units with a foreclosure filing); Davenport, Iowa (one in every 1,346); Shreveport, La. (one in every 1,640); Columbia, S.C. (one in every 1,664); and Rockford, Ill. (one in every 1,696).
Lenders repossessed 6,076 U.S. properties through foreclosure (REO) in the third quarter, down 22% from the previous quarter and down 82% from a year ago to the lowest level since ATTOM began tracking
“We’ll certainly see more repossessions by lenders once the foreclosure moratoria have ended, but maybe not as many as people might expect” Sharga says. “Given the record amount of homeowner equity – over $6.5 trillion – it seems likely that many homeowners in financial distress will opt to take advantage of strong demand among home buyers and sell their property rather than risk losing it to a foreclosure auction.
Despite the drop in foreclosure rates, the process of completing a foreclosure remains, on average, exceedingly long, especially in the judicial states.
In the third quarter, states with the longest average foreclosure timelines for homes foreclosed included Hawaii (1,741 days); New Jersey (1,527 days); New York (1,423 days); Florida (1,230 days); and Washington (1,130 days).
States with the shortest average foreclosure timelines included Virginia (180 days); Minnesota (208 days); Alaska (213 days); West Virginia (236 days); and Texas (244 days).