Distressed Homes Inventory Drops 19 Percent Year Over Year
- The December 2016 foreclosure inventory was 78.9 percent below the January 2011 peak.
- The inventory of mortgages in serious delinquency fell 19.4 percent year over year in December 2016.
- Judicial foreclosure states are keeping the foreclosure rate above the pre-crisis rate.
The national foreclosure inventory – the number of loans in the foreclosure process – fell 29.5 percent year over year in December 2016, 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 2016 it was 78.9 percent below the January 2011 peak.
The foreclosure rate – the share of all loans in the foreclosure process – fell to 0.8 percent in December 2016, down from 1.2 percent in December 2015. The foreclosure rate is back to 2007 levels, and is just slightly above the pre-housing-crisis average foreclosure rate of 0.6 percent between 2000 and 2006.
Figure 2 shows that, collectively, judicial foreclosure states1 continued to have a much higher average foreclosure rate (1.4 percent) in December 2016 than non-judicial states (0.5 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 1.7 times the pre-crisis rate of 0.8 percent. As of December 2016, judicial states had 42 percent of the nation’s outstanding mortgages but 69 percent of all loans in foreclosure.
North Dakota and West Virginia were the only states to post a year-over-year increase in the foreclosure rate, but the increase was minimal. The foreclosure rate in North Dakota remained low at 0.4 percent and the foreclosure rate in West Virginia was 0.7 percent – slightly below the National average.
The serious delinquency rate – the share of loans 90 or more days overdue – was 2.6 percent in December 2016, down from 3.3 percent in December 2015. The December 2016 inventory of mortgages in serious delinquency fell 19.4 percent year over year and was 72 percent below its 2010 peak. The serious delinquency rate fell year over year in all states except Louisiana (+0.4 percent), Wyoming (+0.2 percent), and North Dakota (+0.02 percent).
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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