1.1 Million U.S. Properties with Foreclosure Filings in 2014, Down 18 Percent From 2013 to Lowest Level Since 2006

U.S. Foreclosure Starts Increase to 17-Month High in December;

Average Time to Foreclose Nationwide Decreases For First Time Since Q1 2011

IRVINE, Calif. – Jan. 15, 2015 – RealtyTrac® (www.realtytrac.com), the nation’s leading source for comprehensive housing data, today released its Year-End 2014 U.S. Foreclosure Market Report™, which shows foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 1,117,426 U.S. properties in 2014, down 18 percent from 2013 and down 61 percent from the peak of 2,871,891 properties with foreclosure filings in 2010. The 1.1 million properties with foreclosure filings in 2014 was the lowest annual total since 2006, when there were 717,522 properties with foreclosure filings nationwide.

The report also shows that 0.85 percent of all U.S. housing units (one in every 118) had at least one foreclosure filing in 2014, the first time since 2006 that the annual foreclosure rate has been below 1 percent of all housing units.

“The U.S. foreclosure numbers in 2014 show a foreclosure market that is close to finding a floor and stabilizing at a historically normal level,” said Daren Blomquist vice president at RealtyTrac. “But a recent surge in foreclosure starts and scheduled foreclosure auctions in several states in the last few months of 2014 indicate that lenders are gearing up for a spring cleaning of deferred distress in the first half of 2015 in some local markets.”

U.S. foreclosure starts increase to 17-month high in December

U.S. foreclosure starts in December increased 6 percent from the previous month and 14 percent from a year ago to a 17-month high of 59,358. December was the second consecutive month where U.S. foreclosure starts increased from a year ago following 27 consecutive months of annual decreases in foreclosure starts.

December foreclosure starts increased from a year ago in 26 states, including Massachusetts (up 323 percent), New Jersey (up 262 percent), Nevada (up 194 percent), Missouri (up 88 percent), and New York (up 33 percent).

“The December surge in foreclosure starts is not a cause for concern, as it comes from a previously existing supply of distressed properties,” said Andres Carbacho-Burgos, Senior Economist at Moody’s Analytics, which analyzes RealtyTrac foreclosure data to forecast foreclosure trends. “The national pool of distressed mortgages has not increased despite the surge in foreclosure filings.

“The geographic location of the surge in foreclosure starts is not surprising,” Carbacho-Burgos continued. “The list of states with increased activity in the last months of 2014 includes those with judicial foreclosure backlogs such as Massachusetts, New Jersey, Pennsylvania and New York. Nevada is also not a judicial state but still has a substantial pool of seriously delinquent mortgages relative to the years before the housing crisis.”

Despite the annual increase in foreclosure starts in December and November, foreclosure starts for all of 2014 were still down compared to the previous year. A total of 643,193 U.S. properties started the foreclosure process in 2014, down 14 percent from 2013 and down 70 percent from the peak of 2,139,005 foreclosure starts in 2009. Foreclosure starts in 2014 were at the lowest annual total since RealtyTrac began issuing its annual foreclosure report in 2006.

 

Fourth quarter foreclosure auctions increase for first time in two years

Although scheduled foreclosure auctions nationwide were down in December compared to the previous month and year ago, increases in October and November resulted in an increase in the fourth quarter compared to a year ago — following 15 consecutive quarters of year-over-year decreases in scheduled foreclosure auctions.

A total of 148,023 U.S. properties were scheduled for foreclosure auction in the fourth quarter, an increase of 4 percent from the third quarter and an increase of 7 percent from the fourth quarter of 2013 — the first annual increase in scheduled foreclosure auctions since the fourth quarter of 2010.

Scheduled auctions — which in some states are the foreclosure start — in the fourth quarter increased from a year ago in 28 states, including North Carolina (up 199 percent), Oregon (up 152 percent), New Jersey (up 118 percent), New York (up 90 percent), Minnesota (up 34 percent), and Texas (up 28 percent).

“There was an increase in scheduled foreclosure auctions in some judicial foreclosure states in 2013, and as we expected that resulted in a rising number of sales to third-party investors at foreclosure auctions in 2014,” Blomquist said. “We expect a continued high level of sales to third-party investors at the foreclosure auction in 2015 corresponding to the recent rise in starts and scheduled auctions.”

Bank repossessions decrease to lowest level since 2006

Lenders repossessed 327,069 U.S. properties through foreclosure in 2014, down 29 percent from 2013 and down 69 percent from a peak of 1,050,500 to the lowest annual total since 2006. Bank repossessions (REOs) were also down from a year ago in the fourth quarter (down 29 percent) and in December (down 24 percent).

There were nine states that bucked the national trend with increasing REOs in 2014, including Maryland (up 58 percent), New York (up 40 percent), Oregon (up 38 percent) and New Jersey (up 34 percent).

Other high-level findings from the report:

  • States with the highest foreclosure rate in 2014 were Florida (2.30 percent of all housing units with a foreclosure filing), New Jersey (1.87 percent), Maryland (1.69 percent), Illinois (1.38 percent), and Nevada (1.32 percent).
  • U.S. properties that completed the foreclosure process in the fourth quarter of 2014 took an average of 604 days to complete the foreclosure process, down from a record-high 615 days in the third quarter. It was the first quarterly decrease in the average time to foreclose since the first quarter of 2011.
  • States with the longest average time to foreclose in the fourth quarter were Hawaii (1,067 days), New Jersey (1,057 days), Florida (946 days), New York (934 days) and Illinois (903 days). States with the shortest average time to foreclose in the fourth quarter were Texas (207 days), North Carolina (211 days), Georgia (220 days), Wyoming (230 days) and Colorado (238 days).
  • Among metropolitan statistical areas with a population of at least 200,000, the highest foreclosure rates in 2014 were in Atlantic City, N.J. (3.06 percent of all housing units with a foreclosure filing), Miami (2.79 percent), Orlando (2.69 percent), Palm Bay-Melbourne-Titusville, Fla., (2.44 percent), and Tampa (2.41 percent).
  • Among the nation’s 20 largest metro areas, four posted an increase in 2014 foreclosure activity compared to 2013: New York (up 31 percent), Philadelphia (up 15 percent), Washington, D.C. (up 4 percent), and Houston (up 2 percent).
  • Eight of the 20 largest metro areas posted an annual increase in foreclosure activity in December: New York (up 127 percent), Philadelphia (up 57 percent), Boston (up 56 percent), Houston (up 53 percent), St. Louis (up 18 percent), Minneapolis (up 15 percent), San Diego (up 4 percent), and Washington, D.C. (up less than 1 percent).

Local broker perspectives

“The number of foreclosures in Seattle fell by more than 40 percent in 2014 thanks to our strong economy and hyper-paced housing market. This, combined with the lowest inventory levels in history, continue to push our home values up, reducing the number of home owners who are at risk of falling into foreclosure,” said OB Jacobi, president of Windermere Real Estate, covering the Seattle market. “We expect foreclosures to drop even further in the coming year amidst what is predicted to be another busy year for the Seattle housing market.”

“South Florida is in the fourth quarter of our foreclosure cleanup. Since 2007, we have seen 27 percent of our housing units hit with a foreclosure notice, peaking in 2009 and 2010. Due to the lengthy judicial foreclosure system in the state and the severity of the crisis the tail of this market has been elongated,” said Mike Pappas, CEO and president of the Keyes Company, covering the South Florida market. “It is encouraging to look in the rear view mirror and see us at the other side of the bell curve with foreclosure notices in 2014 nearing 2007 levels. Hopefully, we can put the last nail in this foreclosure coffin and end 2015 at pre-recession numbers.”

“Despite a small increase in December, foreclosures are still playing a very small part in the Southern California marketplace,” said Chris Pollinger, senior vice president of sales at First Team Real Estate, covering the Southern California market.

“While 2015 predictions call for continued stable growth across Ohio, potential risks to the housing recovery still exist, including increased lending regulations such as new collateral underwriting procedures being implemented in January, as well as the fact that foreclosures rates in many areas across the state continue to remain at greater levels than they were in 2006,” said Michael Mahon, executive vice president at HER Realtors, covering the Cincinnati, Columbus and Dayton markets. “Balanced growth takes time, and it is the stability of the Ohio markets that continues to attract consumers, investors, and employers to the region.”

“Not only are the number of foreclosures dropping, but the banks’ starting bids at the auctions have risen,” said Steve Titus, a regular foreclosure investor, licensed builder and broker at RE/MAX Alliance, covering the Boulder market. “In 2013 and more so in 2011 and 2012, deficit bids (banks bidding less than they are owed) were often significant and banks were willing to take a haircut on more loans in an effort to quickly get them off of their books. Now that there are fewer toxic properties, they can take a closer look at each one and are often bidding at or near the full retail value of the property, knowing that the rising market will allow them to collect their entire loan amount — along with the big penalties and fees. This has driven away investors who rehab and resell these homes for a profit because there is no profit. While there are still bargains to be had, more professional investors are toeing the line with more money to spend and fighting their way into what often amounts to very slim margins.

“These days investors are driving around neighborhoods and going door-to-door looking for distressed homes and making unsolicited offers,” Titus continued. “They also snap up good deals on the MLS and other mainstream sources with cash offers and a short close with no contingencies.”

Report methodology

The RealtyTrac Year-End U.S. Foreclosure Market Report provides a count of the total number of properties with at least one foreclosure filing entered into the RealtyTrac database during the year. Some foreclosure filings entered into the database during the year may have been recorded in the previous year. Data is collected from more than 2,200 counties nationwide, and those counties account for more than 90 percent of the U.S. population. RealtyTrac’s report incorporates documents filed in all three phases of foreclosure: Default — Notice of Default (NOD) and Lis Pendens (LIS); Auction — Notice of Trustee Sale and Notice of Foreclosure Sale (NTS and NFS); and Real Estate Owned, or REO properties (that have been foreclosed on and repurchased by a bank). For the annual and quarterly reports, if more than one type of foreclosure document is received for a property during the year or quarter, only the most recent filing is counted in the report. The annual, quarterly and monthly reports all check if the same type of document was filed against a property previously. If so, and if that previous filing occurred within the estimated foreclosure timeframe for the state where the property is located, the report does not count the property in the current year, quarter or month.

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