Foreclosures are coming back

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Foreclosures are coming back

Account Closed
Investor · Member since 2021 · 265 posts · 305 votes
U.S. Foreclosure Activity Continues to Increase Despite Government Moratorium

Highest foreclosure rates in Delaware, Illinois, and Florida

Nationwide one in every 4,078 housing units had a foreclosure filing in Q1 2021. States with the highest foreclosure rates were Delaware (one in every 1,705 housing units with a foreclosure filing); Illinois (one in every 2,175 housing units); Florida (one in every 2,237 housing units); Indiana (one in every 2,397 housing units); and Ohio (one in every 2,500 housing units).

Among 220 metropolitan statistical areas with a population of at least 200,000, those with the highest foreclosure rates in Q1 2021 were Lake Havasu City, Arizona (one in every 518 housing units); Provo, Utah (one in 1,280); McAllen, Texas (one in 1,297); Shreveport, Louisiana (one in 1,353); and Atlantic City, New Jersey (one in 1,441).

Other major metros with a population of at least 1 million and foreclosure rates in the top 50 highest nationwide, included Cleveland, Ohio at No.6, Birmingham, Alabama at No. 9, Jacksonville, Florida at No. 12, Miami, Florida at No. 34, and Riverside, California at No. 39.

Foreclosure starts increase 3 percent from last quarter

Lenders started the foreclosure process on 17,652 U.S. properties in Q1 2021, up 3 percent from the previous quarter.

Those states that saw the greatest quarterly increase in foreclosure starts and had 500 or more foreclosure starts in Q1 2021, included California (up 36 percent); Ohio (up 25 percent); North Carolina (up 15 percent); Virginia (up 11 percent); and South Carolina (up 10 percent).

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Jeffrey Morrisey
New to Real Estate · Baltimore, MD · Member since 2016 · 5 posts · 10 votes
5y

I just want to stress a little caution on this topic. Some of the info in the thread is a little behind the times from a banking perspective. For context, I managed a post foreclosure conventional mortgage claim department at one of these mid to large US banks during the pandemic.

Chances are, we aren't going to see another 2008-esq situation. Banks before didn't have any idea how to handle that kind of inventory, weren't able to scale repairs, and calculate accurate pricing on all the homes they had. They are much, much better now.

In my opinion, the most likely scenario we'll see is a smaller uptick in foreclosures, but a good amount of short sale opportunities. 

As someone stated above, the foreclosure uptick is mostly going to come from the flood gates opening on things currently in their pipelines. Banks have now been sitting on a year and a half of inventory in most cases. Things are at a crawl. However, new foreclosure inventory is not going to be in the same spot. The relief acts that paused foreclosures made it so that any and all non payments can and will be turned into a "bullet payment" that is due at the end of your mortgage term or when you sell the property.  In fact, I have seen a letter sent by several US Senators that was sent to the banks stating that if they hear about banks even suggesting to their customers that the loan balance is due immediately, they will go after them with full force and tie them up in regulation for years to come.

But, that doesn't mean you won't see an increase. All of the banks are going to attempt to go through a loan modification process with the customers to get them squared up. There will be a percentage that refuse to answer phones and letters and will basically allow the foreclosure process to happen out of fear and lack of understanding on the subject.

As stated above, I think some of the best opportunities will come from short sales. Banks can't handle this level of volume all at once. They can't even staff up for it right now because they aren't sure if that foreclosure deadline is going to move again. Because of this, they will most likely be open to short sales just to decrease some of the volume they have. Think of a snake trying to eat a pig. It's a large amount of loans trying to move through a well oiled process that is only built to handle 10% of that volume at a time. Processes, databases, and procedures will break because of this. Now, if these short sales will be profitable for investors is another story. That will depend more on the location and the market.

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  • Marcus Auerbach
    Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
    5y
    Originally posted by @Account Closed:
    Originally posted by @Marcus Auerbach:
    Originally posted by @Account Closed:
    Originally posted by @Marcus Auerbach:

    OMG - talk about fake news!

    The article reads to an uninfomed reader as if there is a waive for forclosures comming, which is very missleading without the context.

    On a national level forclosures are down to about 1% of all sales - so a 3% increase in cases means 1.03%. If forclosures are up 100% (drmatic) we will be only at 2% of all sales.

    I remember when were over 30% nationally, in some metro areas over 45% of all sales being distressed (short sale or forclosure).

    Are we seeing more forclosures? Yes. Will there be even more in the next 12 months. Yes. But it will nowhere near what we have seen and many are hoping for. As others mentioned, we are short 4 million houses and owners have plenty equity to sell and avoid FC. Most of them anyway.

    Context matters.

    Just curious what you know that ATTOM doesn't? Can you distinguish between a turnaround trend and absolute numbers?

    Don't be condescending Mike Baxter. People who subscribe to ATTOMdata, CoreLogic, BlackKnight or John Burns usually understand the context, which you fail to give here, which creates a false narrative, which leads me to the question do you not understand that or do you intentionally take it out of context?

    I provided the link. It isn't my job to just copy and paste what other's research provide. That's called plagierism and is frowned upon. 

    Did you actually READ the report? I suspect not. Now go, read it or not, I don't care. Thinking people actually read something before they comment on it.

     But, your opinion is welcome even if uninformed. ;-)

     I have provided my take on the point, specifically why a 3% increase of almost nothing is almost nothing. That's math.

    You could have tried to make a counter point on the subject matter, but not even a single word - instead you keep choosing to make it personal, which does not reflect well on your character. 

    This, Mike, is what's frowned upon here on BP. 

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  • Darius Ogloza
    Investor · Marin County California · Member since 2018 · 1k+ posts · 2k+ votes
    5y

    Unless I misunderstand something, the typical Fannie forbearance plan allows property owners to tack on additional payments at the end of their mortgages so the fact that 2.3 million took advantage of the program to maintain their lifestyles during the lockdown does not indicate that a wave of foreclosures should be expected. It's not like we will have 2.3 million balloons coming due this year or next. HELOC defaults - same issue. April 2020 was the peak of the panic over Covid. Now, that the light at the end of the tunnel is becoming clearer, no surprise that folks are picking up spending figuring they will be able to pay the amounts due back once employment returns to normal levels. A 6% default rate appears consistent with lifestyle maintenance rather than a wholesale slide down the shoot into penury.

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  • John Slater
    Real Estate Coach · Riverside County, CA · Member since 2017 · 238 posts · 157 votes
    5y
    Originally posted by @Scott Gaspar:

    I thought foreclosures couldn’t start until June 30th?

    Thats the misconception that all lenders and all loans are part of the foreclosure moratorium...  which they aren't. 

    In california we are seeing an increase in 2nd loans foreclosing, sleepy seconds now coming in to play because these smaller "trust" lenders see a chance for the return if they foreclose.  

    The foreclosure moratorium applies to "Federally" backed loans... fannie mae, freddie mac etc..

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  • John Slater
    Real Estate Coach · Riverside County, CA · Member since 2017 · 238 posts · 157 votes
    5y
    Originally posted by @John Slater:
    Originally posted by @Scott Gaspar:

    I thought foreclosures couldn’t start until June 30th?

    Thats the misconception that all lenders and all loans are part of the foreclosure moratorium...  which they aren't. 

    In california we are seeing an increase in 2nd loans foreclosing, sleepy seconds now coming in to play because these smaller "trust" lenders see a chance for the return if they foreclose.  

    The foreclosure moratorium applies to "Federally" backed loans... fannie mae, freddie mac etc..

    just to add to this....

    Many states will be different... we wont see a lot of foreclosures (as in at the court steps for sale) in cali because of the level of equity a lot of people have, however we will likely see a decent increase of pre-foreclosures which is where I find my business, before it gets to the final stage.  We have people in default prior to covid who's lender just paused the process, seemingly not looking to be the bad guy foreclosing at this time... if these people were already behind, now add another 15 months of missed payments, they are screwed.. these dont fit in the category of the moratorium being pre-covid, just like Non-federally backed loans don't fit either..

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