September Foreclosure Activity at Lowest Level Since December 2005

A new report from AATOM Data Solutions shows home foreclosure activity in September 2016 was down 13 percent from the prior month and down 24 percent from one year ago, displaying the lowest level since December 2005. The September and Q3 2016 U.S. Foreclosure Market Report shows 82,972 properties with foreclosure filings—which includes default notices, scheduled auctions or bank repossessions.

For the third quarter, there were 293,190 U.S. properties with foreclosure filings, up 4 percent from the previous quarter but down 10 percent from a year ago. It was the fourth consecutive quarter where foreclosure activity has decreased on a year-over-year basis.

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A Steady Slide Downward

“Foreclosure activity has been on a steady slide downward over the past six years, finally dropping back below pre-crisis levels in September,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “While we’ve known that the national foreclosure problem has been dying a long, slow death for quite some time, the final nail in the coffin of the foreclosure crisis is the year-over-year decrease in the average foreclosure timeline nationwide that we saw in Q3 2016 — the first time that’s happened since we began tracking foreclosure timelines in Q1 2007.

“The decrease in the average foreclosure timeline indicates that banks have worked through the bulk of the legacy foreclosure backlog in most states — with a few lingering exceptions — and that most of the foreclosures being completed now are relatively recent defaults that are more efficiently progressing through the foreclosure pipeline,” Blomquist added.

Historic YOY decrease in average time to foreclose

Properties foreclosed in Q3 2016 took an average of 625 days to complete foreclosure, down from 631 days in the previous quarter and down from 630 days a year ago — the first year-over-year decrease since ATTOM, parent company of RealtyTrac, began tracking average foreclosure timelines in Q1 2007.

The average time to foreclose decreased from a year ago in 19 states, including Nevada (down 22 percent), Massachusetts (down 22 percent), Michigan (down 21 percent), Oregon (down 20 percent) and Texas (down 20 percent).

States with the shortest foreclosure timelines for properties foreclosed in the third quarter were Virginia (196 days), New Hampshire (230 days), Texas (246 days), Minnesota (250 days) and Mississippi (253 days). All five states with the shortest foreclosure timelines employ the non-judicial foreclosure process.

States with longest foreclosure timelines

Counter to the national trend, the average time to foreclose in Q3 2016 increased from a year ago in 27 states, including Pennsylvania (up 28 percent), Wisconsin (up 25 percent), Maryland (up 22 percent), Arizona (up 21 percent) and Colorado (up 20 percent).

States with the longest average foreclosure timelines for properties foreclosed in the third quarter were New Jersey (1,262 days), Hawaii (1,241 days), New York (1,070 days), Florida (1,038 days) and Illinois (942 days). All five states with the longest foreclosure timelines primarily employ the judicial foreclosure process.

Highest state foreclosure rates

The report showed a national foreclosure rate of one in every 1,600 U.S. properties with a foreclosure filing in September.

States with the highest foreclosure rates in September were Delaware (one in every 680 housing units with a foreclosure filing), New Jersey (one in every 691), Nevada (one in every 897), Illinois (one in every 946) and Florida (one in every 950).

Other states with foreclosure rates in the top 10 highest nationwide in September were Maryland (one in every 955 housing units with a foreclosure filing), South Carolina (one in every 1,049), Utah (one in every 1,258), Connecticut (one in every 1,290) and New Mexico (one in every 1,324).

Highest metro foreclosure rates

Among 216 metropolitan statistical areas with a population of at least 200,000, those with the highest foreclosure rates in September were Atlantic City, New Jersey (one in every 375 housing units with a foreclosure filing); Rockford, Illinois (one in every 597); Columbia, South Carolina (one in every 629); Tampa-St. Petersburg, Florida (one in every 710); and Jacksonville, Florida (one in every 722).

Other metro areas with foreclosure rates in the top 10 highest in September were Medford, Oregon (one in every 742 housing units with a foreclosure filing); Lakeland-Winter Haven, Florida (one in every 755); Chicago (one in every 767); Philadelphia (one in every 771); and Bakersfield, California (one in every 778).

Foreclosures drop to 11 year low

A total of 34,685 properties started the foreclosure process in September, down 13 percent from the previous month and down 20 percent from a year ago to the lowest level since May 2005 — a more than 11-year low.

Counter to the national trend, 18 states posted year-over-year increases in foreclosure starts in September, including Arkansas (up 156 percent), Delaware (up 115 percent), Maryland (up 87 percent), Utah (up 63 percent) and Oklahoma (up 47 percent).

Bank repossessions decrease

There were 27,514 properties repossessed by lenders (REO) in September, down 12 percent from the previous month and down 32 percent from a year ago to the lowest level since February 2015.

Counter to the national trend, nine states posted a year-over-year increase in REO activity in September, including Arizona (up 44 percent), Massachusetts (up 40 percent), Washington (up 18 percent), Connecticut (up 16 percent) and California (up 12 percent).

Third-part-investor share of purchases

Third-party investors purchased 44 percent of all properties sold at foreclosure auction in the third quarter, with the remaining 56 percent transferring back to the foreclosing lender at the auction.

The 44 percent sold to third-party investors was the highest share going back as far as Q1 2000 — the earliest data is available — and well above the pre-recession peak of 30 percent in Q2 2005.

Of the properties sold to third-party investors at the foreclosure auction in Q3 2016, 38 percent were sold to institutional investors, defined as entities purchasing at least 10 properties in a calendar year. That was up from 32 percent in the previous quarter and 26 percent a year ago but still below the peak of 70 percent in Q2 2009.

Foreclosure Market Data by State – September 2016

Foreclosure Market Data by State – Q3 2016

For more information or to read the full report click here.

Report methodology

The ATTOM Data Solutions U.S. Foreclosure Market Report provides a count of the total number of properties with at least one foreclosure filing entered into the ATTOM Data Warehouse during the month — broken out by type of filing. Some foreclosure filings entered into the database during the month may have been recorded in previous months. Data is collected from more than 2,200 counties nationwide, and those counties account for more than 90 percent of the U.S. population. ATTOM’s report incorporates documents filed in all three phases of foreclosure: Default — Notice of Default (NOD) and Lis Pendens (LIS); Auction — Notice of Trustee’s Sale and Notice of Foreclosure Sale (NTS and NFS); and Real Estate Owned, or REO properties (that have been foreclosed on and repurchased by a bank). The report does not count a property again if it receives the same type of foreclosure filing multiple times within the estimated foreclosure timeframe for the state where the property is located.

About ATTOM Data Solutions

ATTOM Data Solutions is the curator of the ATTOM Data Warehouse, a multi-sourced national property database that aggregates property tax, deed, mortgage, foreclosure, environmental risk, natural hazard, health hazards, neighborhood characteristics and other property characteristic data for more than 150 million U.S. properties. The ATTOM Data Warehouse delivers actionable data to businesses, consumers, government agencies, universities, policymakers and the media in multiple ways, including bulk file licenses, APIs and customized reports.

ATTOM Data Solutions also powers consumer websites designed to promote real estate transparency:  RealtyTrac.com is a property search and research portal for foreclosures and other off-market properties; Homefacts.com is a neighborhood research portal providing hyperlocal risks and amenities information; HomeDisclosure.com produces detailed property pre-diligence reports.