August foreclosures rise behind loosening moratoria: Attom

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While still greatly trailing year-ago numbers, mortgage foreclosure activity jumped in August from July as moratorium restrictions started lifting and courthouses reopened, according to Attom Data Solutions.

Overall, 9,889 foreclosure filings — inclusive of default notices, bank repossessions and scheduled auctions — took place in the month, a growth of 11% from 8,892 in July. But the August total represented a decline of 81% from 53,007 in August 2019.

Across the country, one in every 13,791 mortgaged properties sat in the foreclosure process in August, an increase compared to July's rate of one in 15,337. But the August ratio was much lower than that of August 2019, which was one in 2,554.

The increase in zombie foreclosures is an indicator of what could come in the distressed marketplace, according to Rick Sharga, executive vice president at RealtyTrac.

"As courtrooms reopen across the country over the next few months, it's likely we'll continue to see an uptick in foreclosure activity, although the numbers will remain artificially low due to the moratoria on foreclosures for most government-backed loans, which has been extended to December," Sharga wrote in a statement to NMN. "Until those moratoria are lifted, it's hard to envision a scenario where foreclosure activity approaches pre-pandemic numbers."

South Carolina had the highest ratio of foreclosures overall, at one in every 6,798 properties. Followed by one in every 7,338 in Florida and one in every 7,924 in Iowa.

Broken down by housing markets with populations above 1 million, Jacksonville, Fla., had the worst rate at one in every 5,877 units. Baltimore followed at one in every 5,988 units, then came Philadelphia at one in every 6,557.

Among metro areas with over 1 million people, New York led with 444 foreclosure starts, followed by 255 in Miami, 246 in Los Angeles, 201 in Chicago and 195 in Houston.

Foreclosure starts followed a similar pattern to the foreclosure rate overall, surging 24% month-over-month to a nationwide total of 5,599 but trailed last August by 80%. By state, Florida, New York, Indiana, Mississippi and New Jersey all had the largest increases from July.

Bank repossessions fell again, dropping 6% from July and 82% year-over-year to a total of 2,035 lender foreclosed properties in August — the lowest level since Attom began its tracking in 2005.

Despite the broad moratoria on foreclosures, Sharga noted some areas in which they're moving forward.

"There also seems to be some movement by a number of state governments to allow accelerated processing of foreclosures for vacant and abandoned properties, and to re-start the foreclosure process on loans that had defaulted prior to the pandemic," Sharga continued. "Both of these actions will decrease blight and prevent vacant properties from becoming safety hazards."

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