Foreclosures surge from a year ago but slow on a monthly basis

Foreclosure starts and completions in November accelerated from year-ago levels but slowed from October, likely having peaked for 2022, Attom Data Solutions said. 

A foreclosure filing — such as a default notice, scheduled auction or bank repossession — appeared on 30,677 properties in November, according to the real estate data and intelligence provider’s monthly foreclosure market report. The number comes out to one in every 4,580 U.S. units and represents a 57% increase from 19,479 recorded in the same month last year, but was 5% below October’s total of 32,376. 

“We may be at or near a peak level of foreclosure activity for 2022,” said Rick Sharga, executive vice president of market intelligence at Attom, in a press release.

“While foreclosure starts and foreclosure completions both increased compared to last year’s artificially low levels, they declined from last month, and lenders often put a moratorium on foreclosures during the holiday season.”

A federal moratorium on foreclosures enacted during the COVID-19 pandemic expired during the summer of 2021, and some local jurisdictions extended protections to delinquent borrowers, resulting in lower-than-average activity in the latter half of last year. 

New foreclosure starts almost doubled on an annual basis, rising to 20,686 properties compared to 10,471 in November 2021. The total slid 5% from 21,829 in October. The three states with the highest number of starts reflected their order in overall population, with California, Texas and Florida leading the country at 2,244, 2,114 and 1,709, respectively.

Despite the steep jump in annual numbers, foreclosure starts are only slightly above 80% of pre-pandemic levels, Sharga said. “We may continue to see below-normal foreclosure activity, since unemployment rates are still very low, and mortgage delinquency rates are lower than historical averages.”

Foreclosures turning into real-estate-owned repossessions saw a similar pattern, with 3,770 homes going into the hands of lenders. The number increased 64% from 2,292 repossessed properties a year earlier, but dropped 9% from 4,156 one month prior. 

States with the highest number were led by Illinois with 343, New York at 313 and Pennsylvania, which saw 220. 

High levels of home equity accrued over the last two years should prevent a surge of foreclosures ending in repossession in the next 12 months, housing experts are predicting. Still, approximately 450,000 U.S. mortgages are now considered underwater, where the amount owed is greater than the value of the home, Black Knight reported earlier this week. But collectively, homeowners were sitting on close to $10 trillion in tappable home equity at the end of the third quarter. 

Leading the list of states with the highest rates of foreclosure filings on a per-property basis was Illinois at one in every 2,401 housing units, followed by Delaware with one in every 2,736 housing units and New Jersey, which recorded a filing on one in every 2,916 properties. 

Last week, Attom also listed New Jersey, Illinois and Delaware among the states most at risk of a housing decline, in part due to their rate of foreclosure activity and number of underwater borrowers living in their borders. 

Metropolitan areas with populations of 1 million or more which were struggling the most with foreclosures were Cleveland, where one in every 1,913 housing units had a listing, followed by Chicago at one in every 2,221 and Riverside, California with a rate of one in 2,294.