As banks lower boom, Foreclosures spike

Image commercially licensed from DepositPhotos
Image commercially licensed from DepositPhotos

This year, more Americans are losing their homes because banks are making up for lost time after state and federal bans on foreclosures ended.

According to real estate data source ATTOM, lenders took back nearly 96,000 properties in the first three months of 2023. This is 22% more than the same time last year. Some states are especially seeing a rise in foreclosures. For example, last year, 1 out of every 762 homes in Illinois went into foreclosure. This was followed by 1 out of every 812 homes in Delaware and 1 out of every 824 homes in New Jersey.

Housing experts in Illinois said that one reason for the rise in people foreclosures was that the state’s ban on foreclosures, which was implemented during the pandemic, had ended. Geoff Smith, executive director of DePaul University’s Institute for Housing Studies in Chicago, said this “created a potential backlog of foreclosure activity” since many homes were legally in foreclosure while the ban was in place.

Late in 2021, restrictions on foreclosures were lifted. “Now lenders are catching up,” said Daniel Lindsey, the top litigation officer for Legal Aid Chicago.

In the rest of the U.S., California had the most default cases in the courts in the first quarter, with almost 7,000 cases. Texas, Florida, and New York were next on the list.

When a mortgage payment is 30 to 90 days late, based on the state, the house is in foreclosure.

Rob Barber, the CEO of ATTOM, said that foreclosures are on the rise, even though the government took steps to stop them during the pandemic. From March 2020 to July 2021, the U.S. Department of Housing and Urban Development put a hold on foreclosures and evictions. According to the Federal Housing Administration, as of September 2022, 1.6 million homes were saved from foreclosure because of the moratorium.

Barber said that foreclosures were caused by “ongoing economic challenges,” such as rising unemployment and persistent inflation, which have hurt U.S. family budgets.

In Q1 2023, the default process began on 65,346 U.S. homes, up 3% from the previous quarter and up 29% from a year ago.

In Q1 2023, California (6,867 foreclosure starts), Texas (6,764 foreclosure starts), Florida (5,724 foreclosure starts), New York (4,345 foreclosure starts), and Illinois (4,006 foreclosure starts) were the states with the most foreclosure starts.

In Q1 2023, New York, New York (4,674 foreclosure starts), Chicago, Illinois (3,549 foreclosure starts), Los Angeles, California (2,210 foreclosure starts), Houston, Texas (2,120 foreclosure starts), and Philadelphia, Pennsylvania (1,985 foreclosure starts) were the major metros with the most foreclosure starts.

The number of foreclosures is up 8% from the last quarter

In the first quarter of 2023, lenders took back 12,518 U.S. homes through foreclosure (REO). This was up 8% from the previous quarter and up 6% from the same time last year.

In Q1 2023, Michigan (1,819 REOs), Illinois (1,039 REOs), California (846 REOs), Pennsylvania (788 REOs), and New York (774 REOs) had the most REOs.

The average time to foreclosure is 12 percent longer than it was in the last quarter.

In the first quarter of 2023, properties that went into default had been in the process for an average of 950 days. This was the highest average number of days since the first quarter of 2018. This is up 12% from the last quarter and up 4% from the first quarter of 2022.

Louisiana (2,770 days), Hawaii (2,486 days), New York (1,963 days), Kentucky (1,881 days), and New Jersey (1,697 days) had the longest average foreclosures for homes that went into foreclosure in Q1 2023.

Wyoming (111 days), Minnesota (141 days), Montana (143 days), Texas (146 days), and Arkansas (157 days) had the least average time to foreclose on a home in Q1 2023.

What we learned from March 2023 Foreclosure Activity

In March 2023, one out of every 3,813 homes in the country was in default.

In March 2022, Illinois had the highest foreclosure rate, with one filing for foreclosure for every 2,050 housing units. Delaware, Nevada, Indiana, and New Jersey also had high foreclosure rates, with one filing for foreclosure for every 2,161, 2,178, 2,223, and 2,299 housing units, respectively.

In March 2023, the foreclosure process began on 24,234 U.S. homes, up 19% from the month before and up 8% from March 2022.

Read Also: US home foreclosure spike by 22% 

In March 2023, lenders finished the default process on 4,791 U.S. homes. This was up 25% from the month before and 9% from March 2022.

Reference: Foreclosures spike as banks lower the boom on homeowners