U.S. Foreclosure Activity Increases 15 Percent in October Driven by 17-Month High in Scheduled Foreclosure Auctions

Biggest Monthly Increase Since U.S. Foreclosure Activity Peaked in March 2010;
Scheduled Foreclosure Auctions Post 24 Percent Monthly Increase, REOs up 22 Percent;
Top Five State Foreclosure Rates in Maryland, Florida, Nevada, Ohio, Illinois;

IRVINE, Calif. – Nov. 13, 2014 — RealtyTrac® (www.realtytrac.com), the nation’s leading source for comprehensive housing data, today released its U.S. Foreclosure Market Report™ for October 2014, which shows foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 123,109 U.S. properties in October, an increase of 15 percent from the previous month but still down 8 percent from a year ago. The 15 percent monthly increase was the largest month-over-month increase since U.S. foreclosure activity peaked in March 2010. The report also shows one in every 1,069 U.S. housing units with a foreclosure filing during the month.

A total of 59,869 U.S. properties were scheduled for foreclosure auction during the month, up 24 percent from the previous month and up 7 percent from a year ago to the highest level since May 2013. Scheduled foreclosure auctions in judicial foreclosure states, where foreclosures are processed through the court system, increased 21 percent from the previous month and were up 3 percent from a year ago and. Scheduled foreclosure auctions in non-judicial states increased 27 percent from the previous month and were up 14 percent from a year ago.

“The October foreclosure numbers are not a complete surprise given that over the past three years there has been an average 8 percent monthly uptick in scheduled foreclosure auctions in October as banks try to get ahead of the usual holiday foreclosure moratoriums,” said Daren Blomquist, vice president at RealtyTrac. “But the sheer magnitude of the increase this year demonstrates there is more than just a seasonal pattern at work. Distressed properties that have been in a holding pattern for years are finally being cleared for landing at the foreclosure auction.

“There is still strong demand from the large institutional investors at the foreclosure auction in some markets, but even in markets with decreasing demand at the foreclosure auction, banks can be confident in selling REO properties quickly and at a good price,” Blomquist continued. “That’s because there is still strong demand from buyers, particularly in the lower price ranges, combined with a dearth of distressed homes listed for sale.” 

Scheduled foreclosure auctions increased from a year ago in 29 states, including Oregon (up 399 percent), North Carolina (up 288 percent), New Jersey (up 118 percent), New York (up 89 percent), Connecticut (up 60 percent), Nevada (up 53 percent), Alabama (up 41 percent), Washington (up 36 percent), Indiana (up 36 percent), California (up 19 percent) and South Carolina (up 18 percent).

Other high-level findings from the report:

  • Lenders repossessed 27,914 U.S. properties via foreclosure (REO) in October, up 22 percent from the previous month but down 26 percent from a year ago. October posted the largest monthly increase in REOs since June 2009.
  • REOs increased from a year ago in 16 states, including Maryland (up 190 percent), Pennsylvania (up 25 percent), New Jersey (up 22 percent), Oregon (up 20 percent) and New York (up 18 percent).
  • Overall foreclosure activity increased from a year ago in 10 of the nation’s 20 largest metropolitan statistical areas in terms of population, including Washington, D.C. (26 percent increase), Philadelphia (13 percent increase), Baltimore (13 percent increase), Riverside-San Bernardino in Southern California (8 percent increase), and New York (7 percent increase).
  • Among the nation’s 20 largest metros, those with the five highest foreclosure rates were Miami (one in every 363 housing units with a foreclosure filing); Tampa (one in every 395 housing units); Baltimore (one in every 435 housing units); Riverside-San Bernardino in Southern California (one in every 495 housing units); and Chicago (one in every 553 housing units).
  • A total of 56,452 U.S. properties started the foreclosure process in October, up 12 percent from previous month but down 4 percent from a year ago. This was the largest monthly increase in U.S. foreclosure starts since August 2011.

Local broker perspectives
“The backlog of delayed foreclosures continues to make its way through the pipeline, with many homeowners letting their homes fall into foreclosure when the Mortgage Forgiveness Debt Relief Act of 2007 expired at the end of 2013,” said Mike Pappas, CEO and President of the Keyes Company representing Southern Florida. “However, we are transitioning from a distressed market to a normal market. The 27 percent decline in the distressed numbers for South Florida confirms we are in the fourth quarter of the distressed game.”

“We saw a bump of foreclosure activity month over month in October,” said Chris Pollinger, senior vice president of sales at First Team Real Estate, covering the Southern California market. “But as an overall percentage of the business, foreclosures continue to represent a very small minority of sales activity.”

“Three key legs have strengthened in the Denver real estate market — conservative lending practices, increased market demand and price stabilization,” said Greg Smith, owner/broker of RE/MAX Alliance, covering the Denver market. “Most homeowners are now in a place where they have enough equity in their homes to sell via a non-distressed channel. We should continue to see this trend through 2015.”

“While the overall market is moving full steam ahead, our newest concern is in the increasing number of reported deeds in lieu of foreclosure and sheriff sale transactions adding to the REO inventory held by lenders,” said Michael Mahon, executive vice president and broker at HER Realtors, covering the Columbus, Cincinnati and Dayton, Ohio markets. “Much of this increase in foreclosure activity is attributed to the lack of incentive for mortgage servicers and consumers to attempt mutually beneficial foreclosure alternatives. Many servicers are acting in a much quicker manner when dealing with mortgage default situations in an attempt to minimize costs of maintaining distressed assets, as well as taking advantage of appreciating home values across Ohio.

“With the November elections behind us, hopes of a stronger housing economy in 2015 are centered on the restoration of the short sale income forgiveness provision of the federal income tax code,” Mahon continued, referring to the Mortgage Forgiveness Debt Relief Act. “This at a time when consumers are being provided no financial support from the federal government concerning income tax relief when entering into short sale solutions with servicers. These economic catalysts are being considered much of the root causes regarding recent month-over-month increases of foreclosure activity.”

Maryland, Florida, Nevada, Ohio and Illinois post highest state foreclosure rates
A total of 5,943 Maryland properties had a foreclosure filing in October, a 68 percent jump from the previous month and up 30 percent from a year ago to the highest level since July 2010. This 51-month high in foreclosure activity gave Maryland the highest state foreclosure rate in the nation in October: one in every 400 housing units with a foreclosure filing. All three stages of foreclosure activity in Maryland increased from a year ago in October: foreclosure starts were up 4 percent, scheduled foreclosure auctions were up 12 percent, and bank repossessions (REOs) were up 190 percent.

The Florida foreclosure rate of one in every 444 housing units with a foreclosure filing ranked second highest among the states in October, down from a No. 1 ranking in the previous month. Florida foreclosure activity in October was down 2 percent from the previous month and down 25 percent from a year ago — the 15th consecutive month with an annual decrease.

One in every 596 Nevada housing units had a foreclosure filing in October, the nation’s third highest state foreclosure rate. Nevada foreclosure activity increased 34 percent from the previous month but was still down 31 percent from a year ago.

Ohio foreclosure activity jumped 51 percent from the previous month, giving Ohio the nation’s fourth highest state foreclosure rate: one in every 674 housing units with a foreclosure filing. Despite the monthly increase, Ohio foreclosure activity was still down 22 percent from a year ago.

Illinois foreclosure activity increased 11 percent from the previous month, and the state posted the nation’s fifth highest foreclosure rate: one in every 712 housing units with a foreclosure filing. Despite the monthly increase, Illinois foreclosure activity was still down 22 percent from a year ago.

Other states with foreclosure rates among the nation’s 10 highest in October were Delaware at No. 6 (one in every 752 housing units with a foreclosure filing); Indiana at No. 7 (one in every 762 housing units); South Carolina at No. 8 (one in every 814 housing units); New Jersey at No. 9 (one in every 878 housing units); and Georgia at No. 10 (one in every 899 housing units).

Florida, Maryland, California cities post highest metro foreclosure rates
With one in every 363 housing units with a foreclosure filing in October, Miami, Fla., posted the highest foreclosure rate among metropolitan statistical areas with a population of 200,000 or more. Miami foreclosure activity in October increased 11 percent from previous month — driven by a 67 percent monthly spike in foreclosure starts — but was still down 27 percent from a year ago.

Foreclosure activity in Orlando, Fla., decreased both annually (13 percent) and monthly (15 percent), but the metro area’s foreclosure rate still ranked second highest nationwide. One in every 394 housing units in Orlando had a foreclosure filing in October, nearly three times the national average.

Despite a 23 percent year-over-year decrease in foreclosure activity, Tampa, Fla., posted the nation’s third highest metro foreclosure rate in October: one in every 395 housing units with a foreclosure filing.

Foreclosure activity decreased 37 percent from a year ago in Jacksonville, Fla., but the city still posted the nation’s fourth highest metro foreclosure rate (one in every 433 housing units with a foreclosure filing), and foreclosure activity increased 13 percent from a year ago in Baltimore, Md., giving that city the nation’s fifth highest metro foreclosure rate (one in every 435 housing units with a foreclosure filing).

The remaining five metro areas with foreclosure rates in the top 10 highest were Cape Coral-Fort Myers, Fl., at No. 6 (one in every 445 housing units); Hagerstown-Martinsburg, Md., at No. 7 (one in every 458 housing units); Lakeland, Fla., at No. 8 (one in every 460 housing units); Visalia, Calif., at No. 9 (one in every 474 housing units); and Pensacola, Fla., at No. 10 (one in every 481 housing units).

Foreclosure activity decreased from a year ago in six of the markets with top 10 highest foreclosure rates. However, there were large increases from a year ago of completed foreclosures in Baltimore (up 212 percent), Hagerstown-Martinsburg (up 178 percent), Visalia (up 60 percent and Orlando (up 23 percent). While scheduled foreclosure auctions increased dramatically from a year ago in Cape Coral-Fort Myers (up 170 percent), Lakeland (up 678 percent) and Orlando (up 33 percent).

Report methodology
The RealtyTrac 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 month — broken out by type of filing. Some foreclosure filings entered into the database during the month may have been recorded in previous months. 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: DefaultNotice of Default (NOD) and Lis Pendens (LIS); Auction — Notice of Trustee’s 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). The report does not count a property again if it receives the same type of foreclosure filing multiple times within the estimated foreclosure timeframe for the state where the property is located.

Report License                                                                               
The RealtyTrac U.S. Foreclosure Market Report is the result of a proprietary evaluation of information compiled by RealtyTrac; the report and any of the information in whole or in part can only be quoted, copied, published, re-published, distributed and/or re-distributed or used in any manner if the user specifically references RealtyTrac as the source for said report and/or any of the information set forth within the report.

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About RealtyTrac
RealtyTrac is a leading supplier of U.S. real estate data, with nationwide parcel-level records for more than 129 million U.S. parcels that include property characteristics, tax assessor data, sales and mortgage deed records, Automated Valuation Models (AVMs) and 20 million active and historical default, foreclosure auction and bank-owned properties. RealtyTrac’s housing data and foreclosure reports are relied on by the Federal Reserve, U.S. Treasury Department, HUD, numerous state housing and banking departments, investment funds as well as millions of real estate professionals and consumers, to help evaluate housing trends and make informed decisions about real estate. 

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Ginny Walker
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ginny.walker@realtytrac.com

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