Rising Bank Repossessions Amidst Decline in Homeowners Receiving Foreclosure Notices

By Clare Trapasso

In a surprising turn of events, the real estate market has witnessed an increase in bank repossessions, despite a decrease in the number of homeowners receiving foreclosure notices. A recent report by ATTOM, a prominent real estate data company, sheds light on this intriguing trend that is raising eyebrows within the industry.

During the month of July, lenders repossessed slightly over 3,300 properties, marking a significant 4% uptick from June and a notable 9% surge compared to the same period the previous year. This rise in completed foreclosures could potentially spark concern, but a closer look at the numbers reveals a more complex picture.

Contrary to the increase in repossessions, the number of property owners facing foreclosure notices has actually decreased. In July, approximately 32,000 properties nationwide received a foreclosure filing, translating to roughly 1 in every 4,380 housing units. This figure represents a noteworthy 12% drop from June and a modest 2% decrease from the previous year. These filings encompass a range of actions, including default notices, scheduled auctions, and bank repossessions.

Rob Barber, the CEO of ATTOM, attributes this decline in foreclosure filings to a rebounding housing market. He emphasizes that factors like rising home prices have empowered homeowners with improved financial resources, providing them with a wider array of alternatives to avert foreclosure.

Interestingly, homeowners who find themselves unable to maintain their mortgage payments may be opting to sell their properties instead of undergoing the foreclosure process. Given the current high home prices, many are likely capitalizing on the opportunity to make a profit from their sale. This contrasts starkly with the aftermath of the Great Recession, when plummeting home values triggered a surge in foreclosures, leaving numerous homeowners grappling with negative equity.

It's worth noting that the recent uptick in bank repossessions is partially attributed to the conclusion of the federal moratorium on foreclosures, which was put in place during the COVID-19 pandemic. With these moratoriums now lifted, lenders are able to proceed with foreclosures that may have been pending for an extended period.

The geographical distribution of these repossessions reveals some interesting insights. Among the states, Illinois saw the highest number of repossessions, with 355 properties lost in July. Pennsylvania followed with 230, closely trailed by California at 217, Michigan at 200, and Texas at 200.

In terms of metropolitan areas, Chicago took the lead in completed foreclosures among cities with over 1 million residents.

When analyzing the regions most susceptible to foreclosures, Maryland emerged as the state with the highest foreclosure rate, with 1 in every 2,071 housing units receiving a foreclosure filing. New Jersey trailed closely, followed by Delaware, Illinois, and South Carolina.

Zooming in on metropolitan areas with at least 200,000 residents, Fayetteville, NC, registered the highest foreclosure rate in July. Other cities in the top five included Atlantic City, NJ; Columbia, SC; Trenton, NJ; and Cleveland.

Conversely, some states have witnessed a substantial drop in the number of homeowners served with foreclosure notices. Hawaii leads this decline, followed by New Hampshire, Idaho, Arkansas, and Alabama.

In conclusion, the intricate interplay between rising bank repossessions and declining foreclosure notices paints a multifaceted picture of the current real estate landscape. The underlying factors, such as market rebound and the conclusion of foreclosure moratoriums, have contributed to these contrasting trends. As the market continues to evolve, homeowners, prospective buyers, and industry experts alike will be watching closely to decipher the implications and potential future shifts in this dynamic scenario.

Find the original article here: https://www.realtor.com/news/trends/bank-repossessions-rise-despite-fewer-homeowners-receiving-foreclosure-notices/

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