Spike in Foreclosure Activity Not a Surprise

The sources that gather such data have all reported a steady decline in mortgage delinquencies since last summer and are all stages are now close to the historic lows that existed prior to the COVID-19 pandemic. However, ATTOM says foreclosure activity is mounting.

The company’s U.S. Foreclosure Market Report for January shows there were a total of 23,204 U.S. properties with some type of foreclosure filing during the month. These include default notices, scheduled auctions and bank repossessions or completed foreclosures. This is an increase of 29 percent from a month earlier and 139 percent compared to January 2021.

“The increased level of foreclosure activity in January wasn’t a surprise,” said Rick Sharga, executive vice president of RealtyTrac, an ATTOM company. “Foreclosures typically slow down during the holidays in November and December and pick back up after the first of the year. This year, the increases were probably a little more dramatic than usual since foreclosure restrictions placed on mortgage servicers by the CFPB expired at the ed of December.”

There were 4,784 bank repossessions (REOs) in January, up 57 percent for the month, a 235 percent year-over-year surge, and the 7th consecutive month that the number of completed foreclosures grew. This is partially a result of a foreclosure moratorium on federally guaranteed loans in effect a year ago and which expired seven months ago, on July 31, 2021.

The number of states with the largest increase in bank repossessions (REOs) compared to December were Michigan (up 622 percent); Georgia (163 percent); Texas (98 percent); Tennessee (50 percent); and Alabama (44 percent).

“It’s very important to keep these numbers in context,” Sharga noted. “Foreclosure completions are still far below normal levels – less than half as many as in January of 2020 before the pandemic was declared, and about 60 percent lower than the number of foreclosure completions in 2019. We’re likely to continue seeing large year-over-year percentage increases for the rest of this year, but it’s also likely that foreclosure activity will remain below historically normal levels until the end of 2022.”

Nationwide one in every 5,922 housing units had a foreclosure filing in January 2022. New Jersey had the highest rate at one filing for every 2,336 housing units followed by Illinois (one in 2,740); Nevada (one in 3,119); Michigan (one in 3,127); and Ohio (one in 3,251).

Lenders started the foreclosure process on 11,854 U.S. properties in January 2022, up 29 percent from last month and 126 percent from a year ago. Foreclosure starts increased for the month in 33 states including the District of Colombia. Florida led with 1,238 starts closely followed by California at 1,226.

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