Foreclosures Approach Normal Level

Foreclosures are, at long last, approaching what CoreLogic says was the level in the pre-crisis environment.  The company's November National Foreclosure Report puts the number of foreclosures completed during the month at 26,000, down from 35,000 in November 2015 and only 4,000 more than in a typical month during 2000 to 2006, a difference nearly identical to the decline in completed foreclosure from October to November.  

November foreclosures were down 78.2 percent from the peak of 118,339 in September 2010. Since the financial crisis began in September 2008, there have been approximately 6.5 million completed foreclosures nationally.  Since homeownership rates peaked in the second quarter of 2004, approximately 8.6 million homes have been lost to foreclosure.

The five states with the highest number of completed foreclosures in the 12 months ending in November 2016 were Florida (48,000), Michigan (31,000), Texas (25,000), Ohio (22,000) and Georgia (20,000). These five states account for 36 percent of completed foreclosures nationally.

At the end of November there were approximately 325,000 properties awaiting foreclosure (the foreclosure inventory) compared to 465,000 a year earlier.  The 2015 number represented 1.2 percent of all homes with a mortgage, a rate that had declined to 0.8 percent in the current report, a decline of 30 percent.  On a month-over-month basis, the November 2016 foreclosure inventory was down 2.4 percent.

CoreLogic also reports that the number of mortgages in serious delinquency (defined as 90 days or more past due including loans in foreclosure or REO) declined by 22.1 percent from November 2015 to November 2016.  One million mortgages, or 2.5 percent of homes with a mortgage, were seriously delinquent, the lowest level since August 2007.  There were annual declines in the serious delinquencies in 48 of the states and the District of Columbia. 

"The decline in serious delinquency has been substantial, but the default rate remains high in select markets," said Dr. Frank Nothaft, chief economist for CoreLogic. "Serious delinquency rates were the highest in New Jersey and New York at 5.6 percent and 5 percent, respectively. In contrast, the lowest delinquency rate occurred in Colorado at 0.9 percent where a strong job market and home-price growth have enabled more homeowners to stay current."

"The 7 percent appreciation in home prices through November 2016 has added an average of $12,500 in home-equity wealth per homeowner across the U.S. during the last year," said Anand Nallathambi, president and CEO of CoreLogic. "Sustained growth in home prices is clearly bolstering homeowners' spending power and balance sheets and, as a result, spurring a continued drop in defaults."