Last housing bubble no longer accountable for local foreclosure growth

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Foreclosure filings plummeted in the first half of the year, but 40% of local markets saw foreclosure starts increase, with the last housing bubble no longer being held responsible for the growth, according to Attom Data Solutions.

"Localized foreclosure flare-ups in the first half of 2018 can no longer be blamed on legacy distress left over from the last housing bubble given that nearly half of all active foreclosures are now tied to loans originated in 2009 or later and given that the average time to foreclose plummeted in the first two quarters of the year," Daren Blomquist, senior vice president at Attom, said in a press release.

"Instead these local foreclosure increases are typically the result of more recent distress triggers in those markets," he added.

Foreclosure filings, including default notices, scheduled auctions or bank repossessions, fell 15% annually to 362,275 properties in the first six months of 2018, and are down 78% from a peak of 1,654,634 achieved in the first half of 2010.

A total of 22 states and 88 of 219 metropolitan statistical areas experienced growth in foreclosure starts during the first half of the year. And in addition to local markets seeing foreclosure start growth, foreclosure rates rose considerably for Federal Housing Administration loans.

"We're also seeing early evidence of gradually loosening lending standards starting in 2014, specifically for FHA-backed loans. The foreclosure rate on FHA loans originated in 2014 and 2015 has now jumped above the average FHA foreclosure rate for all loan vintages — the only two post-recession vintages with foreclosure rates above that overall average," said Blomquist.

About 0.27% of housing units had a foreclosure filing in the first half of the year, with New Jersey and Delaware leading states with the greatest rates.

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Foreclosures Distressed REO Mortgage defaults Attom Data Solutions FHA