Mortgage

New Jersey, Illinois dominates the markets most susceptible to foreclosures

The effects of the pandemic on the risk of foreclosure intensified in some regions in the third quarter.

Even if the number of coronavirus cases declines, it still poses a "significant threat to the economy, with some real estate markets in parts of the country at higher risk than others," said Todd Teta, chief product officer of Attom, in the report.

Nearly half of the 50 counties hardest hit by foreclosure, including all of the top 9 and 14 of the top 20, were in New Jersey and Illinois, according to Attom Data Solutions' special coronavirus report. The report measures risk based on a mix of home affordability, underwater real estate, and foreclosure filings in each area.

Florida and North Carolina were the only other states with more than two counties in the top 50, with four and three, respectively. Conversely, the country's long-standing leadership in upgrading home prices has kept Western markets isolated. Only two counties in the top 50 were in the west: Shasta from California in 31st and Humboldt in 50th.

Sussex County, N.J., has been ranked the market with the highest mortgage risk in the country. In this county, 36.9% of income is required to buy a mid-price home, 18.1% of properties were underwater in the second quarter, and about 0.06% of borrowers in the county applied for in the third Quarter foreclosure. Kendall County, Illinois ranked second with metrics in the same categories of 39.5%, 11.7% and 0.11%, respectively. McHenry, Ill., Followed with affordability and housing measures in line with the previous of 34.6%, 15% and 0.08%.

According to a separate Attom report dated Oct. 14, the number of foreclosure starts rose 32% in the third quarter compared to the second quarter and 67% year over year at high rates.

“I expect we will see three small waves of foreclosure activity when we end the moratorium and forbearance program: one this fall, which is mostly loans that were in foreclosure prior to the pandemic; one in the first quarter of 2022, when the new CFPB service rules (and vacation moratoriums) expire; and another one in the summer, when nearly everyone has left the forbearance program and servicers have exhausted most borrowers' loss mitigation options, ”Rick Sharga, executive vice president of Attom subsidiary RealtyTrac, told NMN. "Even with these waves, I do not assume that foreclosure activities will return to normal levels by the end of 2022."

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