Foreclosure activity shoots up nearly 40% from end of 2021

Foreclosure numbers climbed to their highest level since the onset of the coronavirus pandemic in the first quarter this year, continuing their rise following the expiration of federal borrower protections.

Researchers at Attom Data Solutions, the business intelligence provider and parent company of online marketplace for distressed properties RealtyTrac, found a total of 78,271 properties with foreclosure filings in the first three months of 2022. The number represents a 39% increase from the previous quarter and also came in 132% higher than one year ago when servicers were prohibited from initiating foreclosure proceedings. Consumer Financial Protection Bureau rules protecting homeowners lapsed at the end of last year, likely contributing to elevated activity early this year.

Single-month data from Attom’s Foreclosure Market Report also showed 33,333 properties with foreclosure filings in March, surging 29% from February numbers.

“Foreclosure activity has continued to gradually return to normal levels since the expiration of the government’s moratorium and the CFPB’s enhanced mortgage servicing guidelines,” said Rick Sharga, executive vice president of market intelligence for Attom. However, he noted that the number of foreclosure filings was only at about 57% of the level in the first few months of 2020, the final quarter before Covid-related federal consumer protections were introduced.

First-quarter foreclosure starts also picked up to total 50,759, a 67% jump from the final three months of 2021 and 188% higher than a year ago. Starts increased in every state, with California outpacing the rest of the nation with 5,378. Florida and Texas followed with 4,707 and 4,649, respectively.

One in every 1,795 properties had a foreclosure filing in the first quarter, according to Attom. Illinois led all states in the rate of foreclosures on a per-unit basis, with one in 791 constructions containing a filing. Close behind was New Jersey with one in 792 properties were in the process of foreclosure. Ohio, where one in every 991 units had a foreclosure filing, was third on the nationwide list.

The steep uptick in the first quarter likely signifies the start of a steady climb of foreclosure numbers this year, as servicing workflows return to normal.

“It’s likely that we’ll continue to see significant month-over-month and year-over-year growth through the second quarter of 2022, but still won’t reach historically normal levels of foreclosures until the end of the year at the earliest, unless the U.S. economy takes a significant turn for the worse,” he said.

While the pace of mortgages exiting forbearance plans and returning to current status has significantly increased over the past several months, recent research also shows that many borrowers in loss mitigation are still not making payments. Forbearance re-entries have also recently seen an uptick, indicating some homeowners are still likely undergoing some financial hardship.

Alongside the accelerated pace of starts, completed foreclosures also surged, with banks repossessing 11,824 in the first quarter, an increase of 41% from the previous three months and 160% year over year.