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December Foreclosure Inventory Falls 24 Percent Year Over Year

Foreclosure Inventory is 72 Percent Below Peak Level

Molly Boesel    |    Mortgage Performance

  • The foreclosure inventory fell 23.8 percent year over year in December 2015.
  • The seriously delinquent inventory fell 23.3 percent year over year in December 2015.
  • The foreclosure rate in judicial states is two and a half times the pre-crisis rate.

The national foreclosure inventory – the number of loans in the foreclosure process – fell 23.8 percent year over year in December 2015, according to the latest CoreLogic Foreclosure Report. The foreclosure inventory has fallen on a year-over-year basis every month since November 2011 (Figure 1) and in December 2015 was 72.3 percent below the January 2011 peak.

The December 2015 foreclosure rate – the share of all loans in the foreclosure process – fell to 1.1 percent, down from 1.5 percent in December 2014 and the lowest in a little more than eight years. But that was still above the pre-housing-crisis foreclosure rate of 0.6 percent between 2000 and 2006.

Judicial Foreclosure

Judicial Foreclosure

Figure 2 shows that, collectively, judicial foreclosure states[1] continued to have a much higher average foreclosure rate (1.9 percent) in December 2015 than non-judicial states (0.6 percent). The collective foreclosure rate in non-judicial states is close to the pre-crisis rate of 0.4 percent, while the foreclosure rate in judicial states is almost two and a half times the pre-crisis rate of 0.8 percent.  As of December 2015, judicial states had 42 percent of the nation’s outstanding mortgages but 70 percent of all loans in foreclosure.

Forty-eight states posted year-over-year declines in their foreclosure inventory in December 2015, and 21 of those had decreases of more than 20 percent. The five states with the largest year-over-year drop in the foreclosure inventory were Florida (-41 percent), Minnesota (-35.6 percent), Tennessee (-32.3 percent), Colorado (-32.1 percent) and Nevada (-30.8 percent). Only Massachusetts (+1.8 percent), Rhode Island (+1.7 percent) and Delaware (+0.5 percent) experienced year-over-year increases in the foreclosure inventory.

The seriously delinquent rate – the share of loans 90 or more days overdue – was 3.2 percent in December 2015, down from 4.1 percent in December 2014. The December 2015 inventory of seriously delinquent mortgages fell 23.3 percent year over year. The seriously delinquent rate fell year over year in all states in December 2015.

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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