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Foreclosure Inventory Falls 24 Percent in September 2015

Foreclosure Rate Lowest in Nearly Eight Years

Molly Boesel    |    Mortgage Performance

  • The foreclosure inventory fell 24.3 percent year over year in September 2015.
  • The seriously delinquent inventory fell 21.2 percent year over year in September 2015.
  • The foreclosure rate in judicial foreclosure states is more than three times that of non-judicial foreclosure states.

The national foreclosure inventory fell 24.3 percent year over year in September 2015 to approximately 470,000 homes, or 1.2 percent of all homes with a mortgage, according to the latest CoreLogic Foreclosure Report. The number of loans in foreclosure has fallen on a year-over-year basis every month since November 2011 (Figure 1) and in September 2015 was 69.9 percent below the January 2011 peak. While the September 2015 foreclosure rate was at the lowest level in nearly eight years, it was still above the pre-crisis foreclosure rate of 0.6 percent.

The seriously delinquent rate – the share of loans 90 or more days overdue – was 3.4 percent in September 2015, and the inventory of seriously delinquent mortgages fell 21.2 percent year over year.

There were 48 states that posted year-over-year declines in their foreclosure inventory in September 2015, and 24 of those states had decreases of more than 20 percent. The five states with the largest year-over-year drop in the foreclosure inventory were Florida (-42.3 percent), Michigan (-32.8 percent), Idaho (-31.3 percent), Tennessee (-30.6 percent) and Maryland (-30.1 percent). Only Massachusetts (+22.5 percent), Wyoming (+8.9 percent) and the District of Columbia (+4.3 percent) experienced year-over-year increases in the foreclosure inventory.

Figure 2 shows that, collectively, judicial foreclosure states1 continued to have a higher average foreclosure rate (2.1 percent) in September 2015 than non-judicial states (0.6 percent). The average foreclosure rate for judicial states peaked in February 2012 at 5.4 percent, while non-judicial states peaked at 2.5 percent in January 2011. As of September 2015, 42 percent of outstanding mortgages were in judicial states, but 70 percent of total loans in foreclosure were in those states.

[1] In judicial foreclosure states, lenders must provide evidence of delinquency to the courts in order to move a borrower into foreclosure. In non-judicial foreclosure states, lenders can issue notices of default directly to the borrower without court intervention. This is an important distinction since judicial foreclosure states have longer foreclosure timelines, thus affecting foreclosure statistics.

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