U.S. foreclosure activity at highest since pandemic in January

There were 23,204 U.S. properties with foreclosure filings in January, which is up 29% from the month prior, 139% from the same time a year ago and the highest rate since the start of the Covid-19 pandemic.

That’s according to Attom Data Solutions LLC, an Irvine, California-based property data firm found. It classifies foreclosure filings as default notices, scheduled auctions or bank repossessions.

Attom found:

*Lenders repossessed 4,784 properties nationally through completed foreclosures last month, which is up 57% from last month and 235% from January 2021.
*One in every 5,922 housing units had a foreclosure filing in January 2022.
*Lenders started the foreclosure process on 11,854 U.S. properties last month. That’s an increase of 29% from last month and 126% year over year.

Rick Sharga, executive vice president at RealtyTrac, said the increase in January isn’t a surprise. Traditionally, foreclosure filings dip at the end of the year — between Thanksgiving and New Year’s — which contributes to a rise in January.

But much of the activity in January appears to be completions of foreclosures that started before the pandemic, Sharga said.

“Some of the activity we’re seeing right now is the lenders simply catching up on loans that were in foreclosure prior to the pandemic, but were then suspended by the moratoriums and state protection plans put in place,” he continued. “That’s actually good news. We’re not seeing a lot of new foreclosure activity.”

Sharga said most, if not all, pandemic-induced moratoriums on foreclosure activity have sunsetted by now.

For the rest of 2022, he said he expects year-over-year increases but foreclosure activity isn’t likely to be back at pre-pandemic levels until late 2022 or early 2023.

There are an estimated 800,000 to 900,000 borrowers still in mortgage forbearance that will gradually be exiting between now and September. The Consumer Financial Protection Bureau has put the mortgage servicing industry on notice, Sharga said, which will likely mean loan servicers will proceed with great caution and take longer to move through a foreclosure than they normally would.

Among major metropolitan areas across the U.S., Detroit saw the greatest number of foreclosure completions in January 2022 with 1,013. Detroit also led the nation in highest foreclosure rates last month, with one in every 1,547 housing unit seeing a foreclosure filing. Other metros with a population of at least 200,000 that saw the highest rates last month were:

Atlantic City, New Jersey (one in every 1,564 housing units)
Cleveland (one in every 1,659 housing units)
Columbia, South Carolina (one in every 1,921 housing units)
Trenton, New Jersey (one in every 2,299 housing units)

Sharga said the continued strong housing market will likely mean a greater number of households will be able to stave off foreclosure than years prior. He said about 87% of borrowers currently in foreclosure have positive equity in their homes. They won’t be immune from a foreclosure filing, but could sell their house at a profit and walk away rather than lose the home at auction.

From conversations with auctioneers and others, Sharga said there seems to be a record number of properties that do wind up at auction being purchased by third-party investors. Fewer homes being foreclosed upon are being repossessed by lenders.

That also underscores another big component of today’s housing market: the number of investors purchasing homes to rent them out.

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