Providing custom mortgage credit reports, related services & technology solutions for over 75 years.

800-243-0120

Search Avantus.com

Foreclosure activity drops again in April

May 28, 2019

Since the end of the recession, the rate at which people fall behind on their mortgage payments has fallen sharply year over year on an almost uniform basis. With the economy performing better and more people having a solid financial foundation - along with the fact that lenders greatly reined in their mortgage standards - it should come as no surprise that foreclosure filings continue to tumble nationwide.

"Foreclosure filings were down 13% from April 2018."

In April, there were only about 55,650 foreclosure filings of all types - ranging from initial default notices to final repossessions - across the U.S., a number that was down both 5% from March and 13% from April 2018, according to the latest U.S. Foreclosure Market Report from ATTOM Data Solutions. April was, consequently, the 10th straight month in which foreclosures fell on an annual basis.

A closer look
Altogether, only about 1 in every 2,433 homes nationwide were hit with a filing during this time, and more to the point, roughly 11,000 bank repossessions actually took place, down 9% monthly and 22% annually, indicating that even if people are entering the foreclosure process, they are often able to get back on the right track before their homes are taken back by lenders.

However, it's worth noting that even as the national average of filings fell, there was a lot more fluctuation regionally, the report said. Foreclosure starts actually grew in 17 states, with a total of more than 30,500 filings nationwide - accounting for more than half of all foreclosure activity in the month. Some states were rocked by rising foreclosure starts, such as Washington (up 38% on an annual basis), Florida (34%), Oregon (22%), Louisiana (12%) and Georgia (11%).

"While overall foreclosure activity is down nationwide, there are still parts of the country that we need to keep a close eye on," said Todd Teta, chief product officer at ATTOM Data Solutions. "For instance, Florida is seeing a steady annual increase in total foreclosure activity for the eighth consecutive month, which is being sustained by a constant annual double-digit increase in foreclosure starts."

More good news for the market
Foreclosure filings only come at the end of a longer period of time in which a homeowner has been late on mortgage payments for months at a time, and through this lens, it can be understood that early-stage mortgage delinquencies are an indicator of future foreclosure activity. To that end, it's worth noting that mortgage delinquency fell once again in the first quarter of the year, according to the latest National Delinquency Survey from the Mortgage Bankers Association.

"Only 4.42% of homes were a month behind on payments."

Across the U.S., only 4.42% of residential properties with between one and four units were a month behind on mortgage payments (on a seasonally adjusted basis), down from 4.63% a year earlier, the report said. However, that number was also up from 4.06% in the final quarter of 2018. 

Marina Walsh, MBA's vice president of industry analysis, noted that serious delinquency, which is a shorter-term predictor of future foreclosure activity, declined on both quarterly and annual bases across all mortgage varieties, hitting the lowest point since the second quarter of 2006. Moreover, even despite the quarterly increase in early-stage delinquency, the first quarter still posted the fourth-lowest rate of late payments in 12 years.

"The national mortgage delinquency rate in the first quarter of 2019 was down on a year-over-year basis, which is another sign of a very strong economic environment, bolstered by low unemployment and rising wage growth," Walsh said.

What does it mean?
Walsh's point about the strength of the economy driving a healthier housing market is also reflected in the rate at which consumers are applying for purchase mortgages. Separate MBA data - in its monthly Builder Application Survey - indicates consumers sought to buy newly built homes at a significantly increased rate on both monthly and annual bases. Indeed, applications for these types of properties specifically surged 15.6% year over year, and 3% from March.

In fact, the total number of applications was the highest seen since the statistics were first tracked in 2013, the report said. The pace of home sales at a seasonally adjusted annual rate came to 722,000, up 6.8% from March. Most often - nearly 71% of the time - consumers financed these purchases with conventional mortgages, but another 17.1% did so through the Federal Housing Administration.

The average loan size for these mortgages came to more than $338,700 in April, up from March's nearly $331,800, an increase of about 2% on a monthly basis, the report said.

Potential issues?
While many homeowners are understandably thrilled to have made a home purchase and completed a vital component of the American dream, some younger buyers remain concerned about what the transaction will mean for them in the long term, according to Clever. More than a quarter of millennial homebuyers say they are stressed about owning the property, roughly double the rate of baby boomers who felt the same way. Almost 1 in 5 more indicated they were at least anxious about the situation, compared with 7% of boomers.

"Two-thirds of young buyers made a down payment of less than 20%."

Almost half of young adults also said they felt some buyer's remorse about the process, the survey found. A lot of that stress, however, seems to come from the fact that younger buyers may not have been fully prepared to make the purchase with confidence, the report said. For instance, two-thirds of young buyers made a down payment of less than 20%, and many said they had to make more renovations on their homes than their older counterparts. They were three times more likely than boomers to pay for those improvements with an additional loan, and twice as likely to finance them with credit cards.

Furthermore, 41% noted they didn't realize how costly their mortgage payments would be, and a third said they felt the homes required too much maintenance overall, the survey found. Almost a quarter felt their homes didn't have the features owners needed, and more than 1 in 5 also said their homes had actually lost value since they made the purchase. About 1 in 6 each thought the houses were too small for their needs, or that their interest rates were too high. Another 1 in 7 cited a lack of ideal location, and 10% didn't like the quality of schools in their districts.

Along similar lines, more than 2 in 5 millennials said they were surprised at how much it costs to simply maintain their homes, and they were four times more likely to tap homeowners insurance than boomers, the report said.

To avoid the potential concerns shared by many millennial homebuyers these days - which can often lead to delinquency and default - it's vital for any shopper to work closely with real estate and finance professionals to get a good idea of what kind of property they can afford. Finding a home that offers the best combination of features for a price they find reasonable is vital, and the ability to make a larger down payment with a higher credit score could help them save potentially tens of thousand of dollars over the life of a loan.

 

 

 

If you liked this article, consider signing up for our weekly Buzz recap email! Sent every Friday morning, it's a quick way to catch up on all the industry news and happenings at Avantus. Click here to sign up!