Mortgage

August foreclosures rise behind the relief of moratoria: attom

According to Attom Data Solutions, mortgage foreclosure activity increased in August from July when the moratorium restrictions were lifted and the courthouses reopened.

A total of 9,889 foreclosure requests – including late payment notices, bank withdrawals and scheduled auctions – were received in the month, up 11% from 8,892 in July. However, the August total was an 81% decrease from 53,007 in August 2019.

Across the country, one in 13,791 mortgaged properties was in foreclosure as of August, up from July's rate of 15,337. However, the August rate was much lower than August 2019, one of 2,554.

According to Rick Sharga, executive vice president at RealtyTrac, the increase in zombie foreclosures is an indicator of what could be happening in the distressed market.

"With courtrooms reopening across the country over the next few months, foreclosures are likely to continue to rise, although numbers will remain artificially low due to moratoria on foreclosures on most government-sponsored loans extended through December," Sharga wrote in a statement to NMN. "Until these moratoriums are lifted, it's hard to imagine a scenario where foreclosure activity is approaching pre-pandemic numbers."

South Carolina had the highest foreclosure rate overall with one of 6,798 homes. Followed by one in 7,338 in Florida and one in 7,924 in Iowa.

Broken down by real estate markets of more than 1 million residents, Jacksonville, Florida had the worst rate with one of 5,877 units. Baltimore followed with one of 5,988 units, then Philadelphia came with one of 6,557 units.

Among the subway areas of over 1 million residents, 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 overall foreclosure rate, increasing 24% month-over-month to 5,599 nationwide, but were 80% behind last August. By state, Florida, New York, Indiana, Mississippi, and New Jersey saw the largest increases since July.

Bank redemptions continued to decline, down 6% from July and 82% year-over-year to a total of 2,035 foreclosed properties from lenders in August – the lowest since Attom began tracking in 2005.

Despite the wide moratorium on foreclosures, Sharga identified a few areas where they are making progress.

"There also appears to be some movement from a number of state governments to allow expedited foreclosures processing for vacant and abandoned properties and to resume the foreclosure process on loans that were in default prior to the pandemic," Sharga continued. "Both measures reduce the epidemic and prevent vacant properties from becoming security risks."

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