Though it’s not the wave economists predicted last year, foreclosure activity did increase once the moratorium finally lifted, according to reports from ATTOM Solutions.
ATTOM released its August 2021 U.S. Foreclosure Market Report on Sept. 9, showing a 27% increase in foreclosure starts in August, the first month since the government moratorium was lifted.
There were 15,838 U.S. properties with foreclosure filings in August, marking a 60% year-over-year increase.
The details:
— Nationally, one in every 8,677 housing units had a foreclosure filing in August 2021.
— These states reported the highest foreclosure rates in August: Illinois (one in every 3,848 housing units), Nevada (one in every 4,738 housing units), New Jersey (one in every 4,868 housing units), Delaware (one in every 5,348 housing units), and Ohio (one in every 5,517 housing units).
— Metro areas with the highest foreclosure rates in August 2021: Bakersfield, California (one in every 1,796 housing units); Atlantic City, New Jersey (one in every 1,886 housing units); Cleveland, Ohio (one in every 2,259 housing units); Rockford, Illinois (one in every 3,037 housing units); and Las Vegas, Nevada (one in every 3,718 housing units).
— Lenders repossessed 2,474 U.S. properties through completed foreclosures (REOs) in August 2021, up 2% from last month and 22% YoY.
The takeaway:
Sources claim they expected foreclosure activity to increase after the government’s foreclosure moratorium was lifted on July 31.
“Anytime you go from a moratorium to none, you’re likely to see an increase out there,” says Eric Spotswood, regional mortgage manager at Prosperity Home Mortgage. “I think that there is going to be a little more of a natural progression because there has been a bit of a backlog that’s out there. When I look at it, the exposure is not what a lot of people think it is.”
According to Spotswood, that’s largely due to a few factors, including the amount of time that pandemic affected borrowers who have had substantial time to figure out their plan of action to avoid foreclosure.
“If they are in an area where they are not going to be able to afford their home, they can put it on the market and sell because there is still very little inventory,” Spotswood adds. “It’s still really easy to get out from under a home, so the need for foreclosure really isn’t there, and people have had enough time to plan because the moratorium was in place for so long.”
According to Rick Sharga, executive vice president at RealtyTrac—an ATTOM company—a deluge of borrowers losing their homes is still unlikely despite predictions that more foreclosures may be on the horizon.
“We’ll continue to see foreclosure activity increase over the next three months as loans that were in default before the moratorium re-enter the foreclosure pipeline, and states begin to catch up on months of foreclosure filings that simply haven’t been processed during the pandemic,” Sharga said in a statement.
Sharga noted that the uptick in foreclosure activity in August was significantly higher compared with July and the same period in 2020, mainly because the pandemic-induced moratorium and forbearance measures were in place.
“Both last year’s and last month’s foreclosure starts were artificially low due to the government’s moratorium,” he said. “But in August of 2019, the last year we had ‘normal’ foreclosure activity, there were almost 28,000 foreclosure starts—over three times more than this year.”
Jordan Grice is RISMedia’s associate content editor. Email him your real estate news to jgrice@rismedia.com.
