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Foreclosure Starts Up in First Half of 2022

ATTOM’s Midyear 2022 U.S. Foreclosure Market Report has found that there were a total of 164,581 foreclosure filings (default notices, scheduled auctions, or bank repossessions) nationwide in the first half of 2022, up 153% year-over-year, but down just 1% from the same time period two years ago.

"Foreclosure activity across the United States continued its slow, steady climb back to pre-pandemic levels in the first half of 2022," said Rick Sharga, EVP of Market Intelligence at ATTOM. "While overall foreclosure activity is still running significantly below historic averages, the dramatic increase in foreclosure starts suggests that we may be back to normal levels by sometime in early 2023."

Rising inflation and higher costs in the shopping aisles and gas pumps precipitated the Federal Reserve to raise the nominal interest rate in mid-June as a means to curb inflation.

Another factor that may play into rising foreclosure activity as 2022 continues is the latest from the U.S. Department of Labor (DOL). In the week ending July 9, the seasonally adjusted initial unemployment claims stood at 244,000, an increase of 9,000 from the previous week's level of 235,000. The four-week moving average was 235,750, an increase of 3,250 from the previous week's average of 232,500. To date, the advance seasonally adjusted insured unemployment rate was 0.9% for the week ending July 2, a decrease of 0.1 percentage point from the previous week's unrevised rate.

Real estate-owned (REO) sales took place on a total of 20,750 U.S. properties in the first half of 2022, up 30% from the last half of 2021, and up 113% from the first half of 2020. The greatest number of REO transactions in the first half of 2022 were found in:

  • Illinois (2,434 REOs)
  • Michigan (2,259 REOs)
  • Pennsylvania (1,290 REOs)
  • California (1,043 REOs)
  • Florida (1,041 REOs)

Foreclosure filings in Q2 of 2022 were reported on 90,139 properties nationwide, up 15% over the previous quarter, and up 165% year-over-year.

The national foreclosure activity total in Q2 2022 was 68% below the pre-recession average of 278,912 per quarter from Q1 2006 to Q3 2007, making Q2 2022 the 23rd consecutive quarter with foreclosure activity below the pre-recession average.

Second quarter foreclosure activity was below pre-recession averages in 177 out 223 (79%) metropolitan statistical areas (MSAs) with a population of at least 200,000 and sufficient historical foreclosure data, including New York, Los Angeles, Chicago, Dallas, Houston, Miami, Atlanta, San Francisco, Riverside-San Bernardino, Phoenix, and Detroit. Areas that reported Q2 foreclosure activity above pre-recession averages included Honolulu, Hawaii; Richmond, Virginia; Virginia-Beach, Virginia; Albany, New York; and Montgomery, Alabama.

Reversing course on the national trend with decreasing foreclosure activity compared to one year ago in the nation's most populated metros during the first half of 2022, were only seven of the 223 metro areas analyzed, including:

  • Lake Havasu, Arizona (down 47%)
  • Eugene, Oregon (down 27%)
  • Springfield, Illinois (down 19%)
  • Shreveport, Louisiana (down 9%)
  • Brownsville, Texas (down 8%)

States with the highest foreclosure rates over the first six months of 2022 were:

  • Illinois (0.26% of housing units with a foreclosure filing)
  • New Jersey (0.24% of housing units with a foreclosure filing)
  • Ohio (0.21% of housing units with a foreclosure filing)
  • Delaware (0.20% of housing units with a foreclosure filing)
  • South Carolina (0.19% of housing units with a foreclosure filing)

Other states with first-half foreclosure rates among the 10 highest nationwide included:

  • Florida and Nevada (both at 0.18%)
  • Indiana (0.16%)
  • Georgia and Michigan (both at 0.13%)

According to ATTOM, among the 223 metropolitan statistical areas with a population of at least 200,000, those with the highest foreclosure rates over the first six months of 2022 were found in:

  • Cleveland, Ohio (0.40% of housing units with a foreclosure filing)
  • Atlantic City, New Jersey (0.33% of housing units with a foreclosure filing)
  • Jacksonville, North Carolina (0.31% of housing units with a foreclosure filing)
  • Chicago, Illinois and Columbia, South Carolina (0.30% both with housing units with a foreclosure filing)

Other metro areas with foreclosure rates ranking among the top 10 highest in the first half of 2022 included:

  • Rockford, Illinois (0.30% of housing units with a foreclosure filing)
  • Lakeland, Florida (0.27% of housing units with a foreclosure filing)
  • Akron, Ohio and Fayetteville, North Carolina (both with 0.24% of housing units with a foreclosure filing)
  • Trenton, New Jersey (0.23% of housing units with a foreclosure filing).

A total of 117,383 U.S. properties started the foreclosure process in the first half of 2022, a reading that was up 219% from the first half of 2021, and up 19% from the first half of 2020. States reporting the greatest number of foreclosures starts in the first half of 2022 included:

  • California (12,805 foreclosure starts)
  • Florida (11,448 foreclosure starts)
  • Tennessee (10,970 foreclosure starts)
  • Illinois (8,411 foreclosure starts)
  • Ohio (6,987 foreclosure starts)

"It's important to note that many of the foreclosure starts we're seeing today–in fact, much of the overall foreclosure activity we're seeing right now–is on loans that were either already in foreclosure, or were more than 120 days delinquent prior to the pandemic," Sharga said. "Many of these loans were protected by the government's foreclosure moratorium, or they would have already been foreclosed on two years ago. There's very little delinquency or default activity that's truly new in the numbers we're tracking."

In terms of foreclosure timelines, states that reported the longest average foreclosure timelines for foreclosures completed in Q2 2022 were found in:

  • Nevada (2,683 days)
  • Hawaii (2,619 days)
  • New Jersey (1,984 days)
  • Louisiana (1,901 days)
  • New York (1,823 days)

States reporting the shortest average foreclosure timelines for foreclosures completed in Q2 2022 included:

  • West Virginia (82 days)
  • Montana (84 days)
  • Missouri (117 days)
  • Minnesota (141 days)
  • Arkansas (154 days)

About Author: Eric C. Peck

Eric C. Peck has 20-plus years’ experience covering the mortgage industry, he most recently served as Editor-in-Chief for The Mortgage Press and National Mortgage Professional Magazine. Peck graduated from the New York Institute of Technology where he received his B.A. in Communication Arts/Media. After graduating, he began his professional career with Videography Magazine before landing in the mortgage space. Peck has edited three published books and has served as Copy Editor for Entrepreneur.com.
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