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Thursday, February 3, 2022

Flood of COVID-19 Foreclosures Didn’t Happen

By Trevor Fraser

 ORLANDO, Fla. – After fears that an end to the pandemic-induced moratorium on foreclosures would lead to a wave of homelessness, 2021 had the fewest foreclosures on record, and experts are saying they aren’t likely to rise much this year. The trend is contributing to the already tight U.S. housing inventory and putting more pressure on prices.

There were foreclosure filings on 151,153 properties nationwide in 2021, a 29% drop from 2020, according to a study by foreclosure analysts Attom.

Florida recorded foreclosures on 19,627 properties, an 8% drop from 2020. They represented 0.21% of all Florida properties, the third-highest rate behind Illinois with 0.23% and Nevada with 0.26%.

Metro Orlando, including Orange, Osceola, Lake and Seminole counties, saw fewer than 2,000 foreclosure filings – 5% less than 2020 and down 68% from 2019.

Experts say this is part of a trend that was accelerated by the pandemic but predates it.

“I think there will be a nominal rise [in foreclosures] this year,” said Orlando foreclosure attorney Steven Kramer. “I don’t think it will be a big swing.”

During the pandemic, the federal government banned foreclosures on homes with federally backed mortgages, a practice Kramer said most private lenders also followed. Many feared ending the moratorium would result in a wave of people with back payments losing their homes, but researchers and real estate professionals say that never materialized.

Foreclosure auctions did jump in the fall after the moratorium ended last September, according to David Sicherman, co-owner of OrlandoForeclosureAuctions.com, which handles foreclosure auctions for Orange County. September and October both saw more than 200, as opposed to 167 in August and 80 in July.

But, Sicherman adds, the increased numbers were in line with the past several years, not some huge wave for the area.

Kramer says that’s because of the equity that was gained as home values went up last year, leaving owners in a much better state than during the last mortgage crisis when many owed more than their houses were worth.

“At the very worst, if you’re unable to reinstate your mortgage, if you’re unable to negotiate with the bank, you can sell your house,” Kramer said. “You can take care of them and still put money in your pocket.”

Tansey Soderstrom, president of Orlando Regional Realtor Association, said, “The banks are working with people these days, where they weren’t before. I believe the sellers are taking advantage of that.”

Orlando only had 439 distressed sales last year, which includes bank-owned properties and short sales, a 51% drop from 2020, according to the association.

Kramer said banks are mostly willing to negotiate refinancing plans, eager to avoid the foreclosure crisis that followed the Great Recession in 2007 to 2009. “Banks still have that historical memory of what happened and what a [problem] it was,” he said.

While foreclosures have been trending downward for the past 10 years, the current drop is putting pressure on Orlando’s already-low housing inventory.

Sicherman says he’s seen a rise in third-party investors beating the banks at the auctions. “I’d say they’re bidding more because inventory is so tight in the general market,” he said, adding that foreclosure auctions are usually too competitive for most investors. “They’re willing to pay a premium just to get at the inventory,” Sicherman said. “It’s an inventory squeeze everywhere.”

Kramer said he can foresee a scenario wherein more people put their houses on the market to avoid foreclosure, which then increases inventory and lowers prices, causing the market to stall.

“But that’s assuming a bunch of variables, and there’s just no way to predict,” he said. While he imagines the market will probably slow down this year, he sees that happening no sooner than six months out. “By then, I would imagine the people dealing with the end of the moratorium will have already resolved their issues.”

© 2022 Orlando Sentinel. Distributed by Tribune Content Agency, LLC.

Tuesday, February 1, 2022

Rapidly escalating home and rental costs carry generational consequences

 In 2020, the share of 25-34-year-old adults moving home hit numbers not seen since 1960 – almost one out of five (17.8%). In 2021, it was still 17%.

CHICAGO – As the COVID-19 pandemic continued, more young adults chose to move back home with their parents. In 2020, the share of young adults aged 25 to 34 living at home rose to the highest share recorded since 1960: 17.8%, the National Association of Realtors® (NAR) reports. That percentage fell slightly but remained high in 2021 at 17% – the second-highest share on record.

“Some young adults may have recently moved back home due to the flexibility of remote work trends and to avoid paying high rents,” writes Jessica Lautz, NAR’s vice president of demographics and behavioral insights, on the association’s blog. “Others may be at a family member’s home due to job losses or while virtually attaining higher education goals. Regardless of the reason, living with family may provide a benefit to potential first-time homebuyers.”

About half of young adults surveyed who became first-time homebuyers said they were making rent payments to family as they stayed at home.

However, other young adults have been able to live rent-free while they save for homeownership. Living at home could allow them to pay off their debts, improve their debt-to-income ratio and save for a down payment.

“While living at home may not be an ideal or even a long-term scenario for many families, if prospective first-time buyers can move home before purchasing, this might financially help them save to purchase a home,” Lautz says. “The added flexibility of living with family allows a buyer to better navigate the tight housing market.”

Source: “Young Adults Are Returning to Their Family’s Homes, But for How Long?” National Association of REALTORS® Economists’ Outlook blog (Jan. 26, 2022)

© Copyright 2022 INFORMATION INC., Bethesda, MD (301) 215-4688

Buyers are taking a second look at pre-fab housing as an affordable alternative

USA TODAY 

NEW YORK – Chesney Cross and her husband, Ken, began hunting for a new home in the Knoxville, Tennessee-area just as the pandemic began upending the housing market. After a year of searching, the couple were unable to find anything that fit their $250,000 budget.

“Everything was selling super quickly and above what we wanted to spend,” says Chesney, 33. “We couldn’t find anything that wasn’t a giant fixer-upper.”

The couple had been living in a 1,100-square-foot home for a decade. But when their first child, Cash, arrived in November 2019, it began to feel cramped.

As frustrating as the house-hunting process had become, Cross would still spend hours scouring Instagram for her dream home: #Farmhousestyle. That’s when she came across a picture of a house with the rustic, farmhouse-chic aesthetic she pined for.

The price was right, but it turned out to be a manufactured home, an offspring of the mobile home.

“I mentioned it to my husband, and of course, he had that mindset of like, ‘It’s a trailer, you know,’“ she says, alluding to a common perception of the old, cheaply built mobile homes. “I was like, ‘No, you have to see these photos. It looks beautiful.’“

No matter, the family moved in last year, three months after signing a contract.

As an overheated housing market – marked by double-digit price increases, bidding wars and inventory shortages – puts the dream of homeownership out of reach of many ordinary Americans, manufactured homes are growing in popularity because their cost is roughly half that of homes built on a permanent site.

Unlike a traditional site-built house, which is constructed at its final location using multiple teams of subcontractors, a manufactured home is built in an indoor facility and delivered to its location. That lowers costs by improving the efficiency in the home-building process: All the teams needed to build the manufactured home are in the facility, dramatically reducing labor costs.

More than 43,000 land-lease/mobile park communities exist in the U.S., with an estimated 4.3 million home sites, according to the Manufactured Housing Institute, a national trade organization. And nearly 22 million people live in manufactured homes.

Or Michaelo, founder of Orbit Homes, which makes manufactured homes in California, says the simplicity of completing a house in the factory is what drew him to the business.

“It’s cutting the time of construction, the hassle of dealing with all the trades – and the cost is tremendously lower,” he says.

The price per square foot for a manufactured home in 2021 was about $57, compared with $119 for a home built in a neighborhood (excluding land), according to the MHI.

For the first time in 15 years, manufactured homes were on track to deliver more than 100,000 units last year, a 23% increase over 2016, according to the organization.

Today, manufactured homes refer to homes built on or after June 15, 1976, with construction standards regulated by the Department of Housing and Urban Development. The term “mobile” or “trailer” homes are typically used to describe bare-bones manufactured homes built before 1976.

The quality and durability of manufactured homes have improved in recent decades to conform to federal and state construction requirements. This has made manufactured homes an affordable and attractive form of housing for many, on either individual lots or in parks, say industry experts.

“There’s a lot of demand for our homes right now,” says MHI CEO Lesli Gooch. “And that’s because people are looking for that extra space. They’re looking to own their own four walls, have outdoor space, enough space for a home office. Today’s manufactured homes are built to a federal building code, are structurally secure and resilient, energy-efficient and include a range of modern features that today’s consumers want.”

Not just that, over a five-year period ending in 2019, the median value of manufactured mobile homes rose at a faster clip in 27 states than the median value of single-family homes, a new study from LendingTree shows. That value increased by nearly 40% on average from 2014 to 2019 (the latest census data available), while the median value of single-family homes over that same period increased by 33%, the report says.

As a result, the nationwide median value of a mobile home (as in a moveable dwelling both pre- and post-1976) in 2019 was $53,300. While that is still nearly $190,000 less than the median value of a single-family home, the value of mobile homes has been climbing quickly, according to Lending Tree.

That is not surprising, says Glen Esterson, a broker for mobile park communities and a former mobile park owner, who has seen skyrocketing interest from investors further accelerate during the pandemic.

“In 2020, my team sold 40 mobile park communities. In 2021, we sold 77,” he says. “We’re the most affordable solution for low-income housing.”

Solving the affordable housing crisis requires many pieces, including increasing housing supply through new home construction, addressing zoning regulations that constrain the provision of higher-density and affordable housing. But manufactured housing is an important component, says Gay Cororaton, senior economist and director of housing and commercial research for the National Association of Realtors.

A manufactured home between 1,000- 2,200 square feet costs $138,000, on average, roughly 40% of the median sales price of an existing home at $362,600 and one-third of the cost of a new single-family house, at $416,900, she says.

A major challenge for purchasing a manufactured home is financing and the regulation that the manufactured home sits on land that the homeowner also owns, Cororaton says. For owners of manufactured homes who do not possess the land, mortgage rates tend to be higher as they are considered a riskier investment.

Those drawbacks – along with trailer park or land access fees – may discourage some buyers.

The average sale price of a manufactured house as of August stood at $112,000, while the average sales price of a new site-built house with land totaled $481,700. For homeowners who don’t own the land, the average monthly rent for manufactured homes in the U.S. was $568.

Manufactured homes are the most expensive in Washington, Oregon, and California, mirroring traditional housing market conditions in those states. Washington is the only state where the median value of a mobile home is higher than $100,000. Oregon and California trail, with median values at $93,500 and $91,400, respectively.

Meanwhile, mobile homes are the least expensive in Nebraska, Iowa, and Ohio. All three states have a median value of less than $25,000.

Jacob Channel, an economist with LendingTree, says his company’s report shows that mobile homes can be a good investment.

“People are afraid to buy mobile homes for a variety of reasons. And one of them is that they’re afraid that they won’t see any return on investment,” he says, adding that he believes the report dispels that idea. “If you’re thinking about buying a mobile home, as long as you buy it in a decent location, in a decent trailer park, for example, and you buy a home that’s in a good quality condition, then you can expect to see a return on your investment.”

That was the case with Mark Robinson, 48, who was born and raised in the Paradise Cove mobile park community in Malibu, California.

In 2001, he bought his first mobile home for $65,000 in the Seminole Springs Mobile Home Park in Agoura Hills, just outside Malibu. After joining the Los Angeles County Fire Department as a firefighter, Robinson says he quickly paid off the home. He had a $356 association fee that covered water, sewer and trash.

“I loved the trailer park stigma I got from my co-workers as I watched them struggle to make payments on their stick-built, overpriced homes,” he says, referring to their traditional homes that were built on-site. In 2007, he sold his trailer for $285,000 and pursued his own site-built dream house.

A few years in, Robinson says he missed the beach life and decided to move back into a mobile home on the beach. “We were only 15 minutes away, but there’s a difference about being able to wake up and, you know, have a cup and sit on your deck and be checking the surf at Zuma Beach,” he says.

In 2014, he bought a manufactured home in the Point Dume Club community for $375,000 with the land rights.

In three years, the property had more than doubled in value, and he was able to sell it for $810,000. This time, he bought another home in the same park for $850,000 with ocean views, plus a $1,630 monthly space rent.

“We are getting a $20 million view for $850,000,” Robinson says.

He is in the process of upgrading to a new manufactured home, which is estimated to cost around $500,000. From Robinson’s perspective, it’s also a great investment, with a solar-paneled roof and a fully-wired house.

After Chesney Cross picked out the “Southern Charm” model from Clayton Homes, the largest builder of manufactured homes in the U.S., she added some upgrades, including a pitched roof. The total cost reached about $180,000. A 2-acre parcel in the area they were considering would have cost them $70,000, bringing their total to $250,000, well within the range of their initial budget. The couple instead decided to locate the home on their family property in Sevierville, Tennessee, to save on the price of the land.

A site-built house would have cost them $350,000, she says.

Cross, who lost her job in marketing during the pandemic, says she’s glad they didn’t take on a huge loan for a traditional home.

“We definitely have the space that we needed and have all of the modern touches we wanted,” Cross says. “And of course, the price point was far better than what we were seeing in the market.”

Copyright 2022, USATODAY.com

Tuesday, January 25, 2022

Loans for Condos? New Rules Start to Have an Effect

 By Jeff Lazerson

Fannie’s tighter loan requirements post-Surfside collapse started Jan. 1; Freddie’s start Feb. 28. In the meantime, the list of no-loan condo projects will likely keep growing.

HERMOSA BEACH, Calif. – A nightmare scenario looms for condo buyers applying for certain types of federally backed mortgages. If you are selling or are looking to buy an attached condominium in a community with five or more attached units, conventional financing from mortgage giants Fannie Mae and Freddie Mac may soon become elusive.

Beginning Jan. 1 for Fannie and starting Feb. 28 for Freddie, the mortgage giants are putting the screws to a required HOA questionnaire. New questions ask applicants about the structural integrity of the community and whether any code violations are anticipated.

No doubt, Fannie and Freddie’s updated lender mandates are in response to the Florida condo tower that killed 98 people last June 24. Years of deferred maintenance at the Champlain Towers in Surfside caused the 12-story building to collapse.

Answering the agencies thoroughly and completely could force lenders to decline a mortgage application. (Remember: Mortgage lenders fund a loan, and then may sell it to Fannie or Freddie).

“Yes, lenders are declining projects even for a simple special assessment for repairs now. Things are just trickling in right now because the guidance started Jan. 1,” said one condo project approval expert, who asked to remain unnamed because he’s not the media spokesman for his company. “Soon enough we’ll see the effects hit all the condo market. I’ve only seen it affect projects with major issues at this point; meaning (the project) has code violations and millions of dollars of repairs underway.”

Answering these questions honestly or possibly with a guess could bring liability in the form of future lawsuits against HOA stakeholders, such as the property management company, board members, inspectors, engineers and the association.

If the questionnaire isn’t completely answered because the answers are unknown or undetermined, it might mean the purchase or refinance gets torpedoed.

Here is a sprinkling of questions included in Fannie Mae’s Form 1076 condominium project questionnaire (posted December 2021 and updated to eight from five pages):

Question: Is the HOA aware of any deficiencies related to the safety, soundness, structural integrity or habitability of the project’s building(s)?

My take: If management didn’t know about any deficiencies, for example, and answered as such, should they have reasonably known these calamities could come up later?

Question: Is it anticipated the project will, in the future, have such violations (zoning ordinances, codes, etc., which are related to safety, soundness, structural integrity or habitability)?

My take: For the love of peace, how could one possibly determine if yet-to-be-written, jurisdictional codes trigger new violations in the condo complex?

These dubious questions could be akin to a winning lottery ticket for any attorney who lives in the world of HOA litigation.

Why is this so problematic? The nation has a huge community of really old condos and many of them are backed by Fannie Mae and Freddie Mac mortgages. The U.S. has as many as 156,000 condo associations and cooperatives housing between 27 million and 32 million Americans, according to the Community Associations Institute (CAI).

“Seventy percent of all condo loans in the U.S. are Fannie or Freddie (backed),” said Dawn Bauman, senior vice president of government affairs at CAI. “Sixty to 70% of all condo complexes are more than 30 years old.”

Fannie Mae has a published list of 82 “unavailable” California condo-projects, including the Marina City Club in Marina Del Rey, which has $80 million to $140 million in needed repairs according to a report last year. That a 10-acre complex is one of nearly 1,000 “unavailable” condo projects nationwide. To Fannie Mae, unavailable means a property is ineligible for purchase by the agency.

One mortgage executive told me Fannie is making the rounds, emphasizing these new condo questions during lender visits. So don’t be surprised if that unavailable list explodes as Fannie collects more intel.

To be fair, Fannie and Freddie need to dig more deeply to assess and consider condo structural risk before purchasing those mortgages from lenders. The mortgage giants also may disqualify a condo community for other reasons, such as a lack of budget reserves.

If your loan is denied over the Fan or Fred HOA certification answers, you may be able to get funded on what the industry calls a non-warrantable loan. You should expect to pay perhaps one-half to one point higher in rate than conventional financing. You also might have to provide a larger down payment or have more remaining equity compared with Fannie-type requirements.

But buyer beware: Non-qualified mortgage lenders that offer the exotic non-warrantable condo mortgages are not a loan approval shoo-in, either.

For example, California-based LendSure has a condo guidance checklist to help determine investor risks. The common three items it looks at are investor concentration (how many rentals are in the complex), single investor (does one person or entity own a bunch of the units), and litigation against the condo complex, according to Joe Lydon, co-founder, and managing director of LendSure.

Why so much deferred maintenance? Unit owners are often resistant to increased HOA fees or special assessments for repairs and updates.

Condo complex building inspections can run $15,000 to $50,000 depending on the number of units, according to Bauman.

“Community Associations Institute is lobbying for laws mandating reserve studies and building inspections,” said Bauman. CAI is also asking Fan and Fred to give HOAs more time to be able to address so many of the new HOA questions. “Five years to ramp-up the requisite building inspections.”

Fannie Mae provides weekly updates of approved condo projects in Florida.

Copyright © 2022, Daily Breeze, all rights reserved. Jeff Lazerson is a mortgage broker.

Study: Minority Florida Buyers Denied More Loans

By Sam Sachs 

TAMPA, Fla. – In the current housing market, owning a home is already difficult, especially for first-time homebuyers. Across the United States, minorities are approved for mortgages less often than their white neighbors, according to Zillow.

Zillow, a real estate company, studied mortgage denials across the country to see which demographics were denied mortgages more often. The company analyzed data from the Home Mortgage Disclosure Act (HDMA) during its research.

“The mortgage denial rate was 84% higher for Black applicants than white applicants in 2020 (the latest year for which data is available), according to HMDA, up from 74% in 2019. Nationwide, 19.8% of Black applicants were denied a mortgage in 2020, the highest among races and much higher than the 10.7% of white applicants who are denied,” according to data Zillow analyzed from the HMDA.

Unlike credit card payments, student loans, or other types of consumer debts, home equity turns from money-sink into a wealth asset over time for many Americans.

As property values rise and homeowners pay off their loans, i.e. mortgages, the market turns shelter into an investment. Rising home prices are now increasing equity amounts for homeowners more quickly, as the shortage of available housing inventory for buyers stays limited.

In Florida, the largest percentage of mortgage rejections in 2020 were among American Indian or Alaska Native homebuyers, with 22% of all applicants denied mortgages. According to the Zillow report, closely behind were Black homebuyers, with 21.8% of them seeing their mortgage applications denied.

“Prior to the pandemic, Black homeownership had already hit a record low of 40.6% in the second quarter of 2019,” according to CNBC.

Data from the U.S. Census Bureau showed that pre-pandemic Black homeownership had fallen to 40.6% by the second quarter of the fiscal year. By 2020 Q2, the number of Black homeowners had risen to 47%, but fell again in 2021 Q2 when the percentage shrunk again to 44.6%. In 2019 Q2, at the same time, 57.7% of Asian, Native, Hawaiian and Pacific Islanders owned their homes. That number went up to 61.4% in 2020 Q2, but fell to 58.7% in 2021 Q2.

In the past five years, from 2017 to 2021, Black homeowners across the U.S. remained the demographic in the United States with the lowest percentage of homeowners among their population.

Hispanic families weren’t far behind, while non-Hispanic white families had the highest homeownership rates nationwide, at 71.8% or higher, quarter by quarter.

Echoing a higher likelihood of homeownership among white families and homebuyers, Zillow’s study of HMDA data showed that, compared to all minority demographics, whites had the lowest mortgage denial rate, at just 14.3% in Florida.

Tampa rental data shows minorities spend more income on rent than white neighbors, and Zillow reported a similar gap trend in Tampa concerning the rent burdens families face. The study was published in October 2021, finding that Black and Latinx families spent a higher percentage of their monthly income on rent, meaning more households were rent-burdened compared to their white neighbors.

Mortgages have, historically, been cheaper options than renting while also providing financial equity to families.

The Zillow study showed that households of color “were more likely to report encountering housing and economic challenges due to the pandemic.” Black families were reportedly “more likely than white ones to report a job or income loss and difficulty keeping up with mortgage or rent payments,” adding to the issue of mortgage denial. Mortgage approval is also affected by income, after all, a mortgage is a loan, and the ability to pay off the loan has a significant effect on approval.

“Black home purchase applicants in 2020 had a median income of $67,000, compared to an overall median of $83,000 for all applicants,” Zillow reported. “This may help explain why Black mortgage applicants had smaller down payments in 2020 than applicants from other races.” Zillow also said the median property value of homes Black applicants were trying to purchase through a mortgage was typically lower than any other applicants’ property values, on average.

“Black applicants also typically applied to purchase less-expensive homes in 2020 than applicants from other races – a median property value of $225,000 for Black applicants and $275,000 for all applicants,” Zillow reported. “The typical down payment from a Black applicant was $16,600 less than the overall median down payment in 2020.”

Affordable housing concerns are common across the U.S., as material shortages and limited housing markets push prices up for those trying to buy their first homes, or move somewhere new.

© 2022 WFLA, Nexstar Broadcasting, Inc. All rights reserved.

Thursday, January 20, 2022

Lenders Make it Easier for Buyers to Qualify, but only for Higher Priced Homes

 WASHINGTON – The availability of mortgage credit increased in December, according to the Mortgage Credit Availability Index (MCAI), a report from the Mortgage Bankers Association (MBA). The index is based on data from an Ellie Mae business tool, AllRegs Market Clarity.

The MCAI rose 0.8% to 125.9 in December. If the MCAI declines, it suggests that lending standards are tightening; if it increases, it suggests a loosening of credit by lenders. The index was benchmarked to 100 in March 2012.

The MCAI for conventional loans increased 0.8%, while the government MCAI (FHA, VA, USDA) increased by 0.7%.

Two categories under the Conventional MCAI umbrella also rose month-to-month – jumbo loan MCAI increased by 0.6%, while the MCAI for conforming loans rose by 1.1%.

“Credit supply increased in December, with growth across both conventional and government segments of the market,” says Joel Kan, MBA’s associate vice president of economic and industry forecasting. “The overall credit index increased to its highest level since May 2021, but remained 30% below its pre-pandemic level.”

Kan says December’s looser credit standards mainly came in the adjustable-rate-mortgage and lower-credit-score markets “likely due to a combination of the rising rate environment and affordability challenges. Lenders expanded offerings to qualified borrowers who were the most impacted by these market conditions.”

He also notes an uptick in government streamline refinance programs “to aid borrowers still looking to refinance before rates rise even more.”

Year-to-year, however, jumbo loans saw the biggest spike in looser credit standards.

“The overall supply of mortgage credit only grew around 3% compared to the same month a year ago, with a 34% increase in jumbo credit availability contributing to most of that growth,” Kan says. “Government credit supply, as well as conforming credit, saw tightening last year.”

© 2022 Florida Realtors® - By Kerry Smith

Sunday, January 16, 2022

2021 Foreclosure Activity Hits All-Time Low

 By Kerry Smith

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 a 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®