Foreclosure Inventory Rate Drops to Below Pre-Recession Levels

DSNews  By: Brian Honea

With nearly a 30 percent year-over-year decline in June, the nation’s foreclosure inventory rate—the share of residential homes with a mortgage in some state of foreclosure—is at 1.2 percent, the lowest level since 2007, according to CoreLogic‘s June 2015 National Foreclosure Report released Tuesday.

The foreclosure inventory rate has now declined year-over-year for 44 consecutive months, including June. The 1.2 percent foreclosure inventory rate represented about 472,000 homes, down from 664,000 in June 2014.

Although the national foreclosure inventory rate is back to pre-recession levels, the rate remains high in select areas hit hardest by the crisis, such as Florida and New Jersey.

“The foreclosure rate for the U.S. has dropped to its lowest level since 2007, supported by a continuing decline in loans made before 2009, gains in employment, and higher housing prices,” said Frank Nothaft, chief economist for CoreLogic. “The decline has not been uniform geographically, as the foreclosure rate varies across metropolitan areas. In the Denver and San Francisco areas, the foreclosure rate has fallen to 0.3 percent, whereas in the Tampa market the rate is 3.5 percent and in Nassau and Suffolk counties it is an elevated 4.8 percent.”

The serious delinquency rate—the share of residential mortgages that are more than 90 days overdue, including those that are in foreclosure or REO—also took a substantial drop in June 2015 down to 3.5 percent, about 1.3 million homes, the lowest number since January 2008.

“Serious delinquency is at the lowest level in seven and a half years reflecting the benefits of slow but steady improvements in the economy and rising home prices,” said Anand Nallathambi, president and CEO of CoreLogic. “We are also seeing the positive impact of more stringent underwriting criteria for loans originated since 2009 which has helped to lower the national seriously delinquent rate.”

Completed foreclosures, which are an indication of the actual number of homes lost to foreclosure, dropped by nearly 15 percent year-over-year in June from 50,000 to 43,000. The number of completed foreclosures nationwide in June 2015 represented a 63.3 percent decline from their peak of 117,000 reached in September 2010, according to CoreLogic.

Despite the year-over-year decline and the large dropoff from their peak total nearly five years ago, completed foreclosure bumped up by 41,000 in May to 43,000 in June, which is more than double the monthly pre-recession total. From 2000 to 2006, completed foreclosures averaged about 21,000 monthly. A total of about 5.8 million homes have been lost to foreclosure since the beginning of the financial crisis in September 2008. About 7.8 million homes have been lost to foreclosure since home prices peaked in the second quarter of 2004, according to Corelogic.

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