Foreclosures up 116% in first 6 months

The number of homes in foreclosure jumped 116% in a year in California as restrictions end on the ability of lenders to move against seriously delinquent borrowers.

The U.S. number was even higher, surging 153%.

Are eye-catching jumps in foreclosure activity a sign of financial trouble? Or simply a return to more normal levels of borrower duress as pandemic-era homeowner protections expire?

My trusty spreadsheet took a peek at homes somewhere in the foreclosure process in 2022’s first six months using data compiled by real estate data tracker ATTOM.

California ranked No. 2 in the nation with 16,340 homes somewhere in the foreclosure process. In first place was Florida with 17,624 home loans in trouble. Following California

was Illinois at 14,086, Texas at 11,527 and Ohio at 11,028.

Glass half-full

Let’s look at that level of troubled borrowers compared with the number of all housing units.

Using this measure of frequency, California ranked 14th-highest with a home in foreclosure for every 881 units statewide versus an 854 rate nationally. Most common? There’s a troubled borrower in Illinois for every 385 residences, then New

Jersey at 410, Ohio at 475, Delaware at 497 and South Carolina at 513.

Where are foreclosures filings rare? South Dakota was tops, with 1 in every 9,068 homes, followed by Vermont at 7,598, North Dakota at 4,466, West Virginia at 3,626 and the District of Columbia at 3,539.

California’s archrivals Texas was No. 19 at 1,005 and Florida was No. 6 at 560.

Glass half-empty

Given the opportunity,

after roughly two years of foreclosure moratoriums, lenders are acting. California ranked only 36th with its 116% jump in foreclosure activity versus 2021’s first half.

The biggest jumps were seen in Colorado at 595%, then Michigan at 497%, Minnesota at 268%, New Jersey at 245% and New York at 227%,

Best performances were found in Alaska, down 1%, then South Dakota up 2%, Kentucky up 12%, North Dakota up 43% and New Mexico up 48%.

Texas was No. 6, up 187%, and Florida was No. 28, up 124%.

Quotable

“We are just seeing a jump off artificial lows because of government intervention that did its job, preventing millions of unneeded foreclosures across the country,” says ATTOM analyst Rick Sharga, who notes current foreclosure activity is 40% below what’s considered normal patterns.

Another number

Looking forward, Corelogic reported that 1.9% of California mortgages were in any trouble — 30 days late or more — in May, half of May 2021’s 3.8%.

Similar patterns were found in the state’s big metro areas — Los Angeles-orange County, 1.9%, down from 4.1% in the past year; Inland Empire, 2.6% from 4.8%; San Diego, 1.6% from 3.4%; and San Francisco, 1.3% from 2.8%.

Bottom line

Lender generosity plus government aid gave borrowers in financial distress plenty of chances to avoid losing their homes as coronavirus chilled the economy.

The robust economic rebound out of the lockdown turmoil created big jumps in home values, suggesting a huge, marketing-crashing wave of foreclosure is unlikely at this juncture. Jumps in foreclosures were expected as protections ended for tardy payers.

But ponder 2022’s first half activity versus two years ago — early in the pandemic era — when we experienced huge economic uncertainty and the launch of government aid for troubled borrowers and foreclosure moratoriums.

Nationally, foreclosure activity is down 1% over two years. California’s foreclosures are down 9% in two years — ranked No. 28 among the states.

The biggest increases were seen in Montana at 73%, Colorado at 62%, South Dakota at 54%, Minnesota at 50% and Nevada at 46%,

The biggest drops were found in Vermont, down 63%; then District of Columbia, down 51%; Maryland, down 44%; Alaska, down 43%; and New Mexico, down 40%.

Texas was No. 26, down 5%, and Florida was No. 11, up 12%.

If you need help

The end of halts on foreclosures doesn’t mean troubled borrowers in California can’t get help.

The California Mortgage Relief Program is distributing $1 billion in federal funds to cover missed housing payments — up to $80,000 for mortgage relief and up to $20,000 for property tax relief — for households earning up to 50% more than a region’s median income. The application is free, and any benefits received never have to be paid back.

The relief has been expanded to include homeowners who missed payments in the first half of 2022, with greater income eligibility and covers past-due property taxes for more homeowners.

MAP BY FLOURISH Source: ATTOM