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Foreclosure Starts Near All-Time Low

delinquencyForeclosure starts in February 2020 hit their lowest level on record since January 2000, according to Black Knight’s First Look at February Mortgage Data. Foreclosure starts fell 25% from January 2020, and 20% from the year prior, while the national foreclosure rate also ticked lower in February, falling to 0.45%.

Delinquencies were up slightly from January, but remain more than 15% below last year’s levels. Prepayment activity rose by nearly 8% month-over-month as early 2020 rate declines have begun to impact refinance activity.

By state, Mississippi led Black Knight’s data with the highest percentage of non-current loans, at 9.72%. Mississippi was followed by Louisiana, Alabama, West Virginia, and Arkansas. At the bottom of the ranking were California (1.98%), Oregon (1.88%), Idaho (1.87%), Colorado (1.72%), and Washington (1.70%).

Auction.com reported in January that experts predict foreclosure and REO inflow will increase in 2020, with most of the influx coming for government-insured loans.

The majority of servicers Auction.com surveyed expect foreclosure and REO inflow to increase in five of seven U.S. regions. According to the report, 89% said they expect government-insured foreclosure and REO inflow to increase in 2020, the highest among four product types provided as options in the survey.

The majority of survey respondents said they expect foreclosure and REO inflow to increase in 2020 in five of seven U.S. regions provided as options in the survey. The only two exceptions were the Central and North Central regions. Respondents were split evenly between increased inflow and decreased inflow in both these regions.

“Most in the default servicing industry expect government-insured loans to be the primary source of increased foreclosure inflow in 2020, even in the absence of a widespread recession or housing downturn,” said Jesse Roth, SVP of Strategic Partnerships and Business Development with Auction.com. “That’s a rational conclusion given the rising risk profile of FHA-backed loans originated in the last five years.”

About Author: Seth Welborn

Seth Welborn is a Reporter for DS News and MReport. A graduate of Harding University, he has covered numerous topics across the real estate and default servicing industries. Additionally, he has written B2B marketing copy for Dallas-based companies such as AT&T. An East Texas Native, he also works part-time as a photographer.
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