The Foreclosure Rate in Non-Judicial States Is Now Back to Pre-Crisis Levels
- The November 2016 foreclosure inventory was 79.2 percent below the January 2011 peak.
- The inventory of mortgages in serious delinquency fell 22.1 percent year over year in November 2016.
- Wyoming was the only state to experience a year-over-year increase in its serious delinquency rate.
The national foreclosure inventory – the number of loans in the foreclosure process – fell 30 percent year over year in November 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 November 2016 it was 79.2 percent below the January 2011 peak.
The foreclosure rate – the share of all loans in the foreclosure process – fell to 0.8 percent in November 2016, down from 1.2 percent in November 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 states continued to have a much higher average foreclosure rate (1.4 percent) in November 2016 than non-judicial states (0.4 percent). The collective foreclosure rate in non-judicial states has returned 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 November 2016, judicial states had 42 percent of the nation’s outstanding mortgages but 69 percent of all loans in foreclosure.
North Dakota was the only state to post a year-over-year increase in its foreclosure rate, but the increase was minimal, and the foreclosure rate in North Dakota remained low at 0.4 percent.
The serious delinquency rate – the share of loans 90 or more days overdue – was 2.5 percent in November 2016, down from 3.3 percent in November 2015. The November 2016 inventory of mortgages in serious delinquency fell 22.1 percent year over year and was 72.6 percent below its 2010 peak. The serious delinquency rate fell year over year in all states except Wyoming, where it rose by 0.1 percentage point.
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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