Real Estate

Foreclosures Remain Low As Banks Start To Churn Out Post-Ban Filings

In the months after the federal government lifted its foreclosure moratorium, the share of homes undergoing the foreclosure process remained far below what’s typically seen in normal times.

More than 45,000 properties in the U.S. had some form of foreclosure filing in the third quarter of the year, according to a new report from Attom Data Solutions. 

The number of foreclosed properties rose 34 percent from the previous quarter and was 68 percent higher than the same period last year, when rigid state and federal mandates against foreclosures were in place to stave off a possible crisis.

Rick Sharga, executive vice president of Attom-owned company RealtyTrac, said in the report that the number of foreclosure actions in September was 70 percent lower than they were in September of 2019, before the pandemic began.

“Even with similar increases in foreclosures over the next few months, we’ll end the year significantly below what we’d see in a normal housing market,” Sharga said in the report.

To be counted as a home with a foreclosure filing in Attom’s report, properties had to have a default notice, scheduled auction or bank repossession.

Chart courtesy Attom Data Solutions

The foreclosure news comes on the heels of a separate report from the firm CoreLogic that showed mortgage delinquency rates are on the decline nationwide.

In July, delinquency rates fell to 4.2 percent — a significant decline from the 6.5 percent rate posted in July of the previous year. In March 2020, before disruptions related to the pandemic had been fully felt by homeowners, delinquency rates were as low as 3.2 percent.

Until recently, the governments had stepped in to make it tougher to foreclose on homes where the homeowner was behind on payments. This step, coupled with a similar ban on evictions, were intended to prevent people from losing their homes during the pandemic, before the economy could right itself.

The federal foreclosure ban expired at the end of July.

“So far the government and the mortgage industry have worked together to do an extraordinary job of preventing millions of unnecessary foreclosures using the foreclosure moratorium and mortgage forbearance program,” Sharga said in Attom’s report.

Some states had higher foreclosure rates than others.

Florida led the nation in the third quarter with 1 in every 3,276 housing units undergoing a foreclosure filing. Illinois, Delaware and Nevada took the next three spots, with New Jersey coming in fifth at 1 in 4,487 housing units.

Foreclosure starts were up 23 percent in September over the previous month, and were more than double the levels seen at the same time last year.

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