That tsunami of foreclosures expected when forbearance ended? Barely a splash. ATTOM predicts an uptick that won’t reach “normal levels” until year’s end.

IRVINE, Calif. – In 2021, foreclosure filings – default notices, scheduled auctions and bank repossessions – hit an all-time low, according to ATTOM’s Year-End 2021 U.S. Foreclosure Market Report. The percent of U.S. properties in foreclosure dropped 29% over 2020 and 95% from a peak of nearly 2.9 million in 2010.

ATTOM says it’s the smallest number of foreclosures since it began tracking in 2005. Overall, 151,153 U.S. properties had foreclosure filings in 2021 or 0.11% of all U.S. housing units, down from 0.16% in 2020 and down from a peak of 2.23% in 2010.

Florida still ranks fairly high in a state-by-state ranking, however it’s not the top foreclosure state in the nation, as it was for many months during the Great Recession. And given the overall drop in 2021 foreclosures, Florida foreclosures did not have a large impact on the market.

“The COVID-19 foreclosure tsunami that some people had anticipated is clearly not happening,” says Rick Sharga, executive vice president at RealtyTrac, an ATTOM company. “Government and mortgage industry efforts have prevented millions of unnecessary foreclosures, and while it’s likely that we’ll see a slight increase in the first quarter, we probably won’t see foreclosure activity back to normal levels before the end of 2022.”

Bank repossessions down 98% since 2010 peak

Lenders repossessed 25,662 properties through foreclosure (REO) in 2021, down 49% from 2020 and down 98% from a peak of 1,050,500 in 2010 – also the lowest level as far back as data is available – 2006.

Florida ranked second in the number of REOs (2,287) after Illinois (3,472). California (1,839), Pennsylvania (1,293) and Texas (1,236) rounded out the top five.

 “We believe that repossessions will continue to be lower than normal throughout 2022,” Sharga says. “Homeowners have a record amount of equity – over $23 trillion – and over 87% of homeowners in foreclosure have positive equity. This means that most borrowers will have an opportunity to sell their house at a profit rather than lose everything to a foreclosure auction.”

Foreclosure starts at record low

The number of homes entering the foreclosure process also hit record lows (since first data collection in 2006), dropping 30% in 2021 compare to 2020, and down 96% from a peak of 2,139,005 in 2009.

 “The government’s foreclosure moratorium, the mortgage forbearance program and the mortgage servicing guidelines enacted by the CFPB in August have kept foreclosure starts artificially low over the past year,” Sharga says. “While the recovering economy should prevent a huge increase in defaults, we should see a gradual increase in foreclosure activity as these programs expire, and servicers exhaust all loan modification options for delinquent borrowers.”

Only four states – and not Florida – saw a 2021 increase in foreclosure starts: South Dakota (up 20%), Vermont (up 36%); North Dakota (up 71%) and Nevada (up 85%).

However, ATTOM says three metropolitan areas (population greater than 1 million) saw an increase in foreclosure starts year-to-year, including Miami (up 17%). Birmingham, Alabama, (up 4%) had a bit less, but Las Vegas, Nevada, (up 142%) had notably more.

Foreclosure rates

Overall, Florida’s foreclosure rate (0.23% of housing units had a foreclosure filing) ranked third nationally. Nevada (0.26%) and Illinois (0.23%) had more, while Delaware (0.21%) and New Jersey (0.19%) had less.

© 2022 Florida Realtors®

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Author: marlam