Foreclosures flare up in certain areas despite national decline

Foreclosure starts increased in 40% of metro areas analyzed by ATTOM

By Francis Monfort

15 Jul 2018

While foreclosure starts across the US declined in the first six months of 2018, 40% of metro areas countered the national trend, according to the Midyear 2018 US Foreclosure Market Report released by ATTOM Data Solutions.

ATTOM found that 191,914 properties started the foreclosure process during the period, down 8% from the first half of 2017. Meanwhile, foreclosure starts increased year over year in 88 of the 219 metro areas analyzed in the report. Starts increased 25% in Houston; 17% in Dallas-Fort Worth; 7% in Las Vegas; 23% in Detroit; and 50% in Minneapolis-St. Paul.

The period also saw a total of 362,275 properties with foreclosure filings, including default notices, scheduled auctions, or bank repossessions, in the first six months. The total marks a 15% decline from the same period a year ago.

However, foreclosure activity increased year over year in 26 of the 219 metropolitan statistical areas analyzed in the report. The increase was 10% in Houston; 11% in Dallas-Fort Worth; 4% in Cleveland; 5% in Phoenix; and 2% in Indianapolis.

"Localized foreclosure flare-ups in the first half of 2018 can no longer be blamed on legacy distress left over from the last housing bubble given that nearly half of all active foreclosures are now tied to loans originated in 2009 or later and given that the average time to foreclose plummeted in the first two quarters of the year," said Daren Blomquist, senior vice president with ATTOM Data Solutions. "Instead these local foreclosure increases are typically the result of more recent distress triggers in those markets.”

"We're also seeing early evidence of gradually loosening lending standards starting in 2014, specifically for FHA-backed loans," Blomquist said. "The foreclosure rate on FHA loans originated in 2014 and 2015 has now jumped above the average FHA foreclosure rate for all loan vintages — the only two post-recession vintages with foreclosure rates above that overall average."