Foreclosure Timelines Hit New High as Foreclosure Activity Drops to 11-Year Low

With legacy foreclosures dwindling and delinquencies now near pre-crisis lows, it would make sense if foreclosure timelines were shortening, but apparently that’s not the case, according to the most recent quarterly foreclosure report from ATTOM Data Solutions.

Properties foreclosed in the third quarter had been in the foreclosure process an average of 899 days, up from 883 days in the second quarter to a new record high, the data and analytics firm reports.

States with the longest average foreclose timelines in the third quarter were Indiana (1,779 days), New Jersey (1,281 days), New York (1,256 days), Florida (1,234 days), Illinois (1,087 days) and Connecticut (1,001 days).

States with the shortest average timelines were Virginia (171 days), Arkansas (296 days), Oregon (341 days), North Carolina (417 days), and Texas (437 days).

A total of 191,824 U.S. properties saw foreclosure filings (default notices, scheduled auctions or bank repossessions) in the third quarter, down 13% from the second quarter and down 35% from the third quarter of 2016.

It was the lowest level of foreclosure activity since the second quarter of 2006.

“Legacy foreclosures from the high-risk loans originated between 2004 and 2008 have largely been cleared out of the distressed market pipeline,” says Daren Blomquist, senior vice president at ATTOM Data Solutions, in a statement. “Meanwhile loans originated during the housing boom of the last five years are posting foreclosure rates below historic averages, with the notable exception of FHA loans originated in 2014, which have the highest foreclosure rate of any FHA loan vintage since 2009 — 29 percent above the historic average for FHA loans although still 55 percent below the peak in 2007.

“Elevated foreclosure rates on 2014 vintage FHA loans reflect a gradual loosening of credit as the sustained housing boom is slowly bolstering confidence and increasing risk tolerance in the real estate market,” Blomquist adds. “This trend also explains increasing foreclosure starts in the third quarter in some of the nation’s hottest housing markets, counter to the national trend. If we see this pattern continue for 2015- and 2016-originated loans as those vintages age, we would expect to see a more widespread – although still relatively modest – lift in foreclosure activity in the next few years.”

Lenders started the foreclosure process on 93,724 U.S. properties in the third quarter, a decrease of 7% compared with the previous quarter and down 16% from a year ago.

Metro areas that saw the biggest year-over-year increases in foreclosure starts in the third quarter included Dallas-Fort Worth, Texas (6%); Denver, Colo. (12%); Cincinnati, Ohio (5%); Cleveland, Ohio (29%); and Columbus, Ohio (up 23%).

Other metros that saw increases in foreclosure starts included Austin, Texas (29%); Nashville, Tenn. (17%); Milwaukee, Wis. (97%); Oklahoma City, Okla. (34%); and Louisville, Ky. (27%).

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