Foreclosure filings have declined to their lowest level in 13 years, almost setting a new 13-year low.
The number of properties that received foreclosure filings--default notices, scheduled auctions or bank repossessions—fell to 177, 146 properties in the third quarter of 2018, a decline of six percent, according to the most recent U.S. Foreclosure Market Report from Attom Data Solutions. Compared with the same period a year earlier, foreclosures declined eight percent to their lowest level since the fourth quarter of 2005.
"The biggest foreclosure risk in today's housing market comes from natural disaster events such as the twin hurricanes of a year ago,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “Foreclosure starts spiked in the third quarter in many local markets impacted by those hurricanes. Second, we are seeing relatively modest, but more widespread, foreclosure risk associated with Federal Housing Administration loans originated in 2014 and 2015."
For the eighth consecutive quarter foreclosure activity was lower than the pre-recession average. In Q3 foreclosure activity 36 percent below the pre-recession average of 278,912 properties registered between Q12006-Q3 2007.
"A decade after poorly underwritten mortgages triggered a housing market crash, it's clear that the foreclosure risk associated with those problem mortgages has faded—average foreclosure timelines have dropped to a two-year low, and the share of foreclosures tied to 2004-to-2008 loans has dropped well below 50 percent," said Blomquist.
(The chart below illustrates the states where a foreclosure takes the most days, on average, to complete. Hawaii requires an average of 1,491 days to complete a foreclose, more than twice the national average.)
Foreclosure starts down nationwide, up in 36 percent of local markets
Lenders started the foreclosure process on 91,849 properties in Q3 2018, down six percent from the previous quarter. The performance represents a decline of 3 percent from a year ago—the 13th consecutive quarter with a year-over-year decrease in foreclosure starts.
Counter to the national trend, 15 states posted year-over-year increases in foreclosure starts in Q3 2018, including Florida (up 25 percent); Texas (up 3 percent); Maryland (up 13 percent); Michigan (up 32 percent); and Missouri (up 10 percent).
In contrast to the national trend, 79 of 219 metropolitan statistical areas analyzed in the report (36 percent) posted a year-over-year increase in foreclosure starts in Q3 2018, including Los Angeles, California (up 2 percent); Houston, Texas (up 51 percent); Washington, D.C. (up 2 percent); Miami, Florida (up 29 percent); and Detroit, Michigan (up 65 percent).
Other markets with at least 1 million people and a year-over-year increase of at least 15 percent in foreclosure starts in Q3 2018 were Minneapolis-St. Paul, Minnesota; Tampa-St. Petersburg, Florida; St. Louis, Missouri; Orlando, Florida; Las Vegas, Nevada; Austin, Texas, Milwaukee, Wisconsin; Jacksonville, Florida; and Grand Rapids, Wyoming.
Although overall performance was good, there were some underperforming results.
FHA foreclosure rates for 2014 and 2015 vintages above long-term average
FHA foreclosure rates for 2014 and 2015 loan vintages registered above the long-term average foreclosure rate for FHA loans, the only two post-recession vintages (2010 and later) above the long-term average.
FHA loans originated in 2014 had the highest foreclosure rate of any post-recession loan vintage nationwide, as well as in 31 states and in 63 of 115 metropolitan statistical areas analyzed (55 percent), including New York, Chicago, Dallas-Fort Worth, Philadelphia and Houston.
FHA loans originated in 2015 had the highest foreclosure rate of any post-recession loan vintage in 10 states and in 21 of 115 metropolitan statistical areas analyzed (18 percent), including Atlanta, Miami, San Antonio, Oklahoma City and Memphis.
Highest foreclosure rates in New Jersey, Delaware, Maryland
Nationwide one in every 757 properties had a foreclosure filing in Q3 2018. States with the highest foreclosure rates in Q3 2018 were New Jersey (one in every 267 housing units with a foreclosure filing); Delaware (one in every 315); Maryland (one in every 379); Florida (one in every 449); and Nevada (one in every 472).
Among 219 metropolitan statistical areas analyzed in the report, those with the highest foreclosure rates in Q3 2018 were Atlantic City, New Jersey (one in every 152 housing units with a foreclosure filing); Trenton, New Jersey (one in every 236); Fayetteville, North Carolina (one in every 253); Peoria, Illinois (one in every 299); and Philadelphia, Pennsylvania (one in every 326).
Bank repossessions drop to record low nationwide, but Increased in 17 states
Lenders repossessed 51,459 properties through foreclosure, or real estate owned, in Q3 2018, down 24 percent from the previous quarter and down 8 percent from a year ago to the lowest level since Attom began tracking in the second quarter 2005.
Bucking the national trend, the Washington, D.C. and 17 states posted year-over-year increases in real estate owned activity in Q3 2018, including New Jersey (up 4 percent); Texas (up 21 percent); New York (up 3 percent); Georgia (up 56 percent); and Missouri (up 27 percent).
Average time to foreclose drops to two-year low
Properties foreclosed in Q3 2018 had been in the foreclosure process an average of 713 days, a decline of seven days compared with Q2. That’s down from 899 days in Q3 2017, and the lowest level since Q2 2016— a two-year low.
States with the longest average foreclosure timelines for homes foreclosed in Q3 2018 were Hawaii (1,491 days); Indiana (1,295 days); Florida (1,177 days); Utah (1,170 days); New Jersey (1,137 days); and New York (1,092 days).
States with the shortest average foreclosure timelines for homes foreclosed in Q3 2018 were Virginia (179 days); Mississippi (209 days); New Hampshire (216 days); Alaska (237 days); and Nebraska (240 days).
