Higher foreclosure starts due to looser mortgage underwriting: Attom

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July's year-over-year increase in foreclosure starts for 44% of the nation's metro areas is a result of looser underwriting standards and a sign of future growth in defaults, said Attom Data Solutions.

A total of 30,187 properties started the foreclosure process for the first time in July, up 1% from June and up less than 1% from a year ago. This is the first year-over-year increase in foreclosure starts nationwide following 36 consecutive months of year-over-year decreases.

"The increase in foreclosure starts is not just a one-month anomaly in many local markets given that July represented the third consecutive month with a year-over-year increase in 33 metro areas, including Los Angeles, Miami, Houston, Detroit, San Diego and Austin," Daren Blomquist, senior vice president, said in a press release.

"Gradually loosening lending standards over the past few years have introduced a modicum of risk back into the housing market, and that additional risk is resulting in rising foreclosure starts in a diverse set of markets across the country. Most susceptible to rising foreclosure starts are affordability-challenged markets where homebuyers are more financially stretched and markets with some type of trigger event such as a natural disaster or large-scale layoffs."

There were 21 states that had a year-over-year increase in foreclosure starts, including Florida, which was up 35%.

Out of 219 metro areas with a population of at least 200,000 people, 96 had an increase in foreclosure starts, including Indianapolis, up 107%; Jacksonville, Fla., up 81%; Houston, up 76%; and Detroit, up 71%.

Nearly one in every 2,086 housing units nationwide had a foreclosure filing in July. In New Jersey, the rate was one in every 723 housing units, followed by Delaware at one in every 841, Maryland at one in every 1,038 and Florida with one in every 1,180.

Among metro areas, Atlantic City, N.J., had the highest rate of foreclosure filings, with one in every 448 housing units, followed by Peoria, Ill. (one in every 622), and Fayetteville, N.C. (one in every 683).

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Foreclosures Mortgage defaults Distressed Underwriting Attom Data Solutions Florida
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