Foreclosure risk of problem mortgages has faded says ATTOM

by Steve Randall11 Oct 2018

The quality of US mortgage loans continues to rise with foreclosures in the third quarter of 2018 near a 13-year-low.

There were 177,146 US properties with foreclosure filings in the third quarter, down 6% from the previous quarter and down 8% from a year ago to the lowest level since Q4 2005.

A report from ATTOM Data Solutions shows that, for the 8th consecutive quarter, foreclosure activity in Q3 2018 was 36% below the pre-recession (between Q1 2006 and Q3 2007) average of 278,912 properties with foreclosure filings.

"A decade after poorly underwritten mortgages triggered a housing market crash, it's clear that the foreclosure risk associated with those problem mortgages has faded — average foreclosure timelines have dropped to a two-year low, and the share of foreclosures tied to 2004-to-2008 loans has dropped well below 50 percent," said Daren Blomquist, senior vice president at ATTOM Data Solutions.

Disaster risk is top concern

The biggest foreclosure risk in today's housing market comes from natural disaster events such as last year’s hurricanes added Blomquist.

“Foreclosure starts spiked in the third quarter in many local markets impacted by those hurricanes. Secondarily, we are seeing relatively modest — but more widespread — foreclosure risk associated with FHA loans originated in 2014 and 2015," he said.

Lenders started the foreclosure process on 91,849 U.S. properties in Q3 2018, down 6% from the previous quarter and down 3% from a year ago.

However, 15 states posted year-over-year increases including Florida (25%); Texas (3%); Maryland (13%); Michigan (32%); and Missouri (10%).

At a metro level, Los Angeles (2%); Houston (51%) percent); Washington, D.C. (2%); Miami (29%); and Detroit (65%) were among 79 out of 219 analyzed posted gains in foreclosure starts year-over-year.


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