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Q3 Foreclosure Rates ‘Reflecting Other Aspects of the Economy’

in Daily Dose, Featured, Foreclosure, Loss Mitigation, REO, Servicing October 13, 2022 3,474 Views

ATTOM has released its Q3 2022 U.S. Foreclosure Market Report, which shows there were a total of 92,634 U.S. properties with foreclosure filings—defined as default notices, scheduled auctions or bank repossessions—up 3% from Q2 and 104% year-over-year. There were a total of 31,836 U.S. properties with foreclosure filings in September 2022, down 8% from August 2022, but up 62% from September 2021.

Lenders started the foreclosure process on 67,249 U.S. properties in Q3 2022, up just 1% from the second quarter, and up 167% from a year ago—nearly reaching pre-pandemic levels.

“Foreclosure starts, while rising since the end of the government’s foreclosure moratorium, still lag behind pre-pandemic levels,” said Rick Sharga, EVP of Market Intelligence for ATTOM. “Foreclosure activity is reflecting other aspects of the economy, as unemployment rates continue to be historically low, and mortgage delinquency rates are lower than they were before the COVID-19 outbreak.”

The Bureau of Labor Statistics (BLS) has reported that the U.S. economy added 263,000 jobs in September, as the unemployment rate edged back down to a more than 50-year low of 3.5%.

Regionally, the top five states that posted the greatest number of foreclosure starts in the third quarter included:

  • California with 7,368 foreclosure starts
  • Florida with 6,671 foreclosure starts
  • Texas with 6,217 foreclosure starts
  • Illinois with 4,702 foreclosure starts
  • New York with 3,997 foreclosure starts

Among the 223 metropolitan statistical areas (MSAs) that ATTOM analyzed in the report, the top five areas that posted the greatest number of foreclosure starts in the third quarter included:

  • New York, New York with 4,621 foreclosure starts
  • Chicago, Illinois with 3,950 foreclosure starts
  • Los Angeles, California with 2,275 foreclosure starts
  • Philadelphia, Pennsylvania with 1,991 foreclosure starts
  • Miami, Florida with 1,990 foreclosure starts

Among the MSAs with a population greater than one million that saw a slide in foreclosure starts in the third quarter were:

  • Tulsa, Oklahoma down 60%
  • Kansas City, Missouri down 26%
  • Birmingham, Alabama down 25%
  • Minneapolis, Minnesota down 23%
  • Cincinnati, Ohio down 22 percent

Nationwide one in every 1,517 properties had a foreclosure filing in Q3 2022, and states reporting the highest foreclosure rates in the third quarter were:

  • Illinois with one in every 694 housing units with a foreclosure filing
  • Delaware with one in every 825 housing units with a foreclosure filing
  • New Jersey with one in every 855 housing units with a foreclosure filing
  • South Carolina with one in every 971 housing units with a foreclosure filing
  • Ohio with one in every 1,027 housing units with a foreclosure filing

Among the 223 MSAs analyzed by ATTOM, those with the highest foreclosure rates in Q3 2022 were:

  • Peoria, Illinois with one in every 472 housing units with a foreclosure filing
  • Cleveland, Ohio with one in every 589 housing units with a foreclosure filing
  • Jacksonville, North Carolina with one in every 593 housing units with a foreclosure filing
  • Columbia, South Carolina with one in every 599 housing units with a foreclosure filing
  • Rockford, Illinois with one in every 602 housing units with a foreclosure filing

In terms of real estate-owned (REO) properties, lenders repossessed 10,515 U.S. properties through foreclosures in the third quarter of 2022, up 18% from Q2, and up 39% year-over-year.

“Very few of the properties entering the foreclosure process have reverted to the lender at the end of the foreclosure,” Sharga added. “In fact, nearly three times more homes were repossessed by lenders in the second quarter of 2019 than in the second quarter of 2022. We believe that this may be an indication that borrowers are leveraging their equity and selling their homes rather than risking the loss of their equity in a foreclosure auction.”

States that posted the largest number of completed foreclosures in Q3 included:

  • Illinois with 1,331 REOs
  • Michigan with 729 REOs
  • New York with 695 REOs
  • Pennsylvania with 643 REOs
  • Ohio with 557 REOs

Properties foreclosed in Q3 2022 had been in the foreclosure process an average of 885 days, down from 948 days in the previous quarter, and down 4% from 924 days in the third quarter of 2021. States with the longest average foreclosure timelines for homes foreclosed in Q3 2022 included:

  • Hawaii at 2,121 days
  • New Jersey at 2,002 days
  • Louisiana at 1,963 days
  • Kansas at 1,848 days
  • New York at 1,808 days

States with the shortest average foreclosure timelines for homes foreclosed in Q3 were:

  • Minnesota at 113 days
  • Mississippi at 167 days
  • Texas at 168 days
  • Nebraska at 168 days
  • Missouri at 172 days

Click here for more on ATTOM’s Q3 2022 U.S. Foreclosure Market Report.

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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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