The number of foreclosures continued to drop in June, reaching levels not seen since 2001, according to the June Black Knight Mortgage Monitor. A full 45 percent of foreclosures in June were first-time foreclosures, which was the lowest volume of first time foreclosure starts Black Knight has ever observed; it was also 40 percent below long term, pre-crisis norms.
June marked 29 consecutive monthly declines in foreclosure inventory, with only one monthly increase in the past five years. First time starts were also down 11 percent from last year, while repeat foreclosures dropped 20 percent, the report stated. Overall foreclosure starts were down 16 percent over the year.
Oil and gas states experienced year-over-year declines in foreclosure activity. Alaska, North Dakota, Wyoming and Louisiana experienced declines, as did Washington and Nevada, which showed the greatest declines, down 37 percent from last year.
Over the year, Mississippi had the greatest foreclosure starts per capita, with one of every 457 mortgages referred to foreclosure per month while Colorado was lowest, one per 2,341 per month. Nationally, the foreclosure start rate averaged about a tenth of a percent, at one per 861 per month. That’s the lowest such average since 2000
There have been 132,400 foreclosure sales (completions) so far in 2017, according to Black Knight. That’s a 23 percent year-over-year decline, and the lowest volume to start any year since 2005. Overall, foreclosure sales volumes are below pre-crisis averages.
Florida led all states with 12,000 foreclosure sales, year-to-date), followed closely by New Jersey, with 10,500. New York and the District of Columbia recorded the lowest foreclosure completion rate so far this year, with less than two percent of active foreclosure inventory going to sale each month. On the other end of the spectrum, foreclosures are completed on nearly 15 percent of Michigan’s active foreclosure inventory each month, the most of any state, the report stated.
The inventory of loans in active foreclosure dropped to 410,000 by June. Still, active foreclosure inventory remains 44 percent above normal levels, Black knight reported.
“While slowing from the high seen in September 2016 (a 31 percent annual decline), the national foreclosure rate has fallen by 27 percent over the past year, on par with the three-year average,” the report stated. “It should be noted that despite volumes nearing ‘normal’ levels, strong reductions continue on an annual basis due to both increased foreclosure completions and very low levels of new defaults.”
Forty percent of outstanding foreclosures relate to aged foreclosures. As of June, there were approximately 170,000 active foreclosures that were more than two years delinquent; 85,000 of those haven’t had a payment made in more than five years, according to the report. Historically, aged foreclosures have accounted for just seven percent of total active inventory, meaning there are approximately 150,000 more today than what is considered normal.
All this bodes well for the future of foreclosed properties, Black Knight concluded.
“At the current rate of improvement, the foreclosure rate will fall to pre-crisis (2000-2006) levels in the summer of 2018, hitting the lowest level since the turn of the century by mid-2019,” the report stated. “However, based on current improvement rates, even when foreclosure volumes normalize there will still be over 70,000 excess aged foreclosures.