Foreclosure starts jumped in 24 states in April

Overall foreclosure numbers remained near historic lows in April under the 14th month of CARES Act protections but nearly half of the states in the country saw an uptick in activity, according to Attom Data Solutions.

Foreclosure filings — inclusive of default notices, bank repossessions and scheduled auctions — totaled 11,810, down from 11,880 in March and 14,148 in April 2020. However, some regions in the country face more exposure to foreclosure vulnerability and saw their numbers rise month-over-month.

Total foreclosure starts fell 1% monthly and 26% annually to 6,355 properties in April. Meanwhile, starts jumped from March in 24 states, surging 76% in Washington, 53% in New York, 47% in Kentucky, 28% in Alabama and 26% in Indiana. Broken down at the county level, Los Angeles County, California, led the nation with 259 foreclosure starts in the month, followed by 256 in Cook County, Illinois, and 142 in Clark County, Nevada.

“Virtually all of the foreclosure activity today is made up of vacant and abandoned properties, or commercial loans, which often don't have the same protections as loans on residential properties," Rick Sharga, executive vice president of Attom's consumer-facing business, RealtyTrac, said in the report.

One in every 11,636 U.S. mortgaged properties sat in a stage of the foreclosure process in April, compared to one in every 11,568 in March and 2,745 the year before. Delaware continued holding the highest foreclosure rate at one in every 5,700 units. Nevada came next at one in 5,738 units, followed by Illinois at one in 5,890.

Among housing markets with populations above 1 million, Cleveland had the country’s worst foreclosure rate at one in every 3,550 properties. Las Vegas came next at one in every 4,838, then Riverside, California, at one in every 5,020.

Lender repossessions edged down 1% monthly and plummeted 41% yearly with a total of 1,555 properties completing the foreclosure process in April. California had the most REOs for the month with 190, trailed by 176 in Florida and 127 in Illinois. Among the major housing markets, the most bank repossessions came in Chicago with 113, Philadelphia with 90 and Riverside with 53.

With the moratorium expected to be pushed back to late 2021 and the encouraging rate of consumers exiting forbearance, Sharga said he doesn’t expect a large influx of foreclosures when the programs expire. Those, combined with servicers actively working with borrowers should lessen the blow of any upcoming distress.

“I think the industry has really shown a huge amount of compassion in helping to move through this,” George FitzGerald, chief operating officer of Black Knight's servicing technologies division, said in an interview. “So, I don't expect it's going to be a free-for-all" when the protections lift.