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Latest Look Offers Mixed Default Picture

foreclosure-sign-twoWhile a seasonal decline in foreclosure starts is customary for this time of year, in November foreclosure starts fell to levels not seen in nearly a decade.

Meanwhile, 90-plus day delinquencies experienced a seasonal increase in both October and November.

Could there be a correlation between the two? Definitely, according to Black Knight Financial Services' November 2015 Mortgage Monitor released Monday.

In November, there were 31,000 first-time foreclosure starts, the lowest total for any one month since 2005, when Black Knight began tracking the data. In fact, November's foreclosure starts total was 18 percent lower than the lowest monthly total reported in 2005, which was in January of that year (37,700). November's total of repeat foreclosures (35,000) was the lowest total for any one month since April 2008. Overall, the 66,000 foreclosure starts were the lowest total in a month since April 2006, partially due to seasonality, since November contained two federal holidays (Thanksgiving and Veteran's Day).

Seasonality drove the 27 percent increase in 90-day defaults since March, but 90-day defaults were still down by 19 percent over the year in November. The combination of the seasonal increase in 90-day defaults and the sharp decline in foreclosure starts is contributing to the increase in 90-day delinquent inventory in October and November, according to Black Knight.

1-8 BK Graph

"The rise in 90-day delinquencies we highlighted in this month’s Mortgage Monitor are strictly seasonal, matching the historical pattern very well,” said Ben Graboske, SVP of Black Knight Data and Analytics. “The drop in foreclosure starts is driven by the overall decline in 90-day delinquent inventory, which is down by over 25 percent from a year ago. Interestingly, foreclosure starts are actually taking place at a slightly higher rate as compared to the remaining 90-plus delinquent inventory today than they were a year ago. That said, we anticipate a continued decline in foreclosure starts as 90-day delinquent inventories continue their overall trend of improvement.”

In judicial foreclosure states, 90-day default rates were 25 to 30 percent higher than in non-judicial foreclosure states for the six-month period ending in November, according to Black Knight.

Click here to view the entire November 2015 Mortgage Monitor.

About Author: Brian Honea

Brian Honea's writing and editing career spans nearly two decades across many forms of media. He served as sports editor for two suburban newspaper chains in the DFW area and has freelanced for such publications as the Yahoo! Contributor Network, Dallas Home Improvement magazine, and the Dallas Morning News. He has written four non-fiction sports books, the latest of which, The Life of Coach Chuck Curtis, was published by the TCU Press in December 2014. A lifelong Texan, Brian received his master's degree from Amberton University in Garland.
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