Despite numerous reports indicating a decline in foreclosure inventory, according to RealtyTrac notices of default, bank repossessions, auction sales or some other form of foreclosure filing were up 3% in January over the previous month.
What this means in part is that there remains a great demand for property preservation/field services across the nation. And, while CoreLogic indicated that the pace of foreclosures slowed year-over-year, overall the nation still recorded 767,000 completed foreclosures in 2012. That is a big number when you consider that prior to the housing bubble bursting in 2006, about 21,000 foreclosures occurred annually nationwide.
In specific markets, such as Illinois, Indiana, Pennsylvania, and especially Florida, foreclosure activity increased year-over-year for the first time in more than 12 months. With one out of every 198 homes getting hit with a foreclosure notice in January, Nevada once again led the nation in the rate of foreclosures for more than 60 consecutive months. At present, there are approximately 1.2 million foreclosed properties in the U.S. today, another big number.
Many housing industry experts expect the foreclosure numbers in 2013 to be higher than last year’s totals. This is partially due to the lenders’ and servicers’ efforts in 2012 to ensure that foreclosure-related paperwork was proper, and more importantly, legal, which has created a backlog in the process—part of the “shadow inventory”. But many of these loans and their associated properties will emerge from the shadows this year.
Add to this the devastation caused on the East Coast by Hurricane Sandy, and the potential for additional natural and other disasters to occur without warning, and you can easily determine that there is much need for home inspections, ongoing maintenance, restoration and repair across America. Some estimates have concluded that the property damage from this one severe-weather event rose above $50 billion, and Congress recently passed a $60 billion appropriations bill in large measure to help those affected by the storm.
Beyond the typical deferred maintenance and poor condition often found on properties in default—especially if they are vacant—wildfires, earthquakes, floods, tornadoes, and even severe drought negatively impact properties in large numbers. Access to the impacted areas and the properties therein, of course, is vitally important for field services providers in assessing the extent of any damage, securing bids, communicating with their lender/servicer clients, beginning the process of filing claims, then initiating and completing necessary repairs. It is critical for property preservation companies to have such “boots on the ground.”
At Assurant we continuously track over 30 million loans across America, which greatly helps our clients minimize risk with respect to these and other types of disasters. In fact, advances in geo-coding technologies are making it easier for best-in-class field services providers and their clients to better establish what collateral may be affected.
Defaulted loans, however, continue to generate the largest number of work orders for field services providers. Depending on whose predictions you choose to believe, the outlook following the economic contraction in the fourth quarter of 2012 would seem to portend the potential for continued slow growth and possibly another rise in foreclosures across the country—this is particularly true if we enter into another recession. Continued unemployment rates of 7.8% and higher, declining consumer confidence, higher taxes for many Americans, the aforementioned slow economic recovery, inevitable disasters and so forth could all conspire to keep property preservation/field service providers quite busy in the foreseeable future.
Lynn Effinger is business development manager for Assurant Property Advantage, part of Assurant Inc.