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Foreclosure Inventory Below Pre-Crisis Levels, But Still Three Times the ‘Normal’ Rate

foreclosure-notice-four [1]The foreclosure inventory percentage dropped by 22.5 percent year-over-year in June down to about 1.46 percent of all residential mortgages nationwide, according to Black Knight Financial Services [2]' First Look at June 2015 Mortgage Data [3] released Thursday.

The number of loans in some state of foreclosure as of June 2015 dropped to about 739,000 year-over-year, the lowest number since 2007, prior to the financial crisis. Even with the decline, however, the foreclosure inventory rate is still three times its "normal" rate, according to Black Knight.

The delinquency rate (loans 30 days or more overdue but not in foreclosure), dropped by 3 percent from May to June after two consecutive months of increases, and has fallen by 16 percent year-over-year. The number of mortgage loans in the universe that were delinquent as of the end of June was 2.44 million, a drop of 439,000 since last June. The number of non-current loans (mortgage loans 30 days or more overdue or in foreclosure) for June was 3.18 million, a decline of more than 650,000 loans from a year earlier, according to Black Knight.

Foreclosure starts totaled 79,000 in June, which was the second-lowest lowest post-crisis monthly total, according to Black Knight. The lowest post-crisis monthly foreclosure start volume of 73,500 occurred in April 2015 [4]. Foreclosure starts have totaled less than 100,000 every month since January 2014.

All 50 states experienced declines in their non-current inventory during the first six months of 2015, according to Black Knight. Florida had the largest decline with 21 percent, down to about 8 percent, still far below the state's peak of 25.5 percent experienced in January 2010.

Mississippi led all states in both non-current rate (12.7 percent) and serious delinquency inventory, loans 90 days or more overdue (4.4 percent) in June – even improvements of 9.3 percent and 16.5 percent, respectively, since the start of the year. The next closest state to Mississippi in serious delinquency rate was Rhode Island at 3.2 percent, while the next closest state in non-current inventory was New Jersey at 10.6 percent, more than 2 full percentage points behind.