US Home Foreclosure Filings Jump 3 Percent in May: Report

Homes for sale in Irvine, Calif., on Sept. 21, 2020. (John Fredricks/The Epoch Times)

Housing foreclosure filings in the United States increased in May while the number of completed foreclosures declined, according to real estate data curator ATTOM.

There were 32,621 foreclosure filings for properties in May, according to a June 11 press release from ATTOM. This is up 3 percent from a month earlier but down 7 percent from a year ago. One in every 4,320 housing units in the United States filed for foreclosure in May. New Jersey had the highest filing rate, at one in 1,939. This was followed by Illinois, Delaware, Connecticut, and Florida.

In metropolitan regions with populations higher than 1 million, Chicago had the highest foreclosure rate, with one in 2,015 housing units. Philadelphia came in second, followed by Riverside, Jacksonville, and Las Vegas.

“May’s foreclosure activity highlights nuanced shifts in the housing market,” said Rob Barber, chief executive officer at ATTOM.

“While we observed a slight increase in foreclosure starts, the decline in completed foreclosures indicates resilience in certain areas. Monitoring these evolving patterns remains crucial to understanding the full impact on the real estate sector,” he added.

Lenders started foreclosure proceedings on 22,385 properties in May, up 3 percent from April but down 4 percent from May 2023. Last month, lenders repossessed 2,879 properties through foreclosure procedures, which was 28 percent lower than last year.

Data from Statista shows that foreclosure rates in the United States have dipped over the last decade. In 2013, the rate of foreclosure was 1.04 percent, which dropped to 0.26 percent by 2023.

During a recent National Private Lenders Association (NPLA) meeting, Rick Sharga, founder of CJ Patrick Company, a firm that helps clients drive business strategy, pointed out that current foreclosure rates are lower compared to pre-pandemic levels.

“Foreclosures are still about 60 percent of 2019 levels and falling. We have low unemployment, low mortgage delinquencies, and very low levels of foreclosures,” he said.

“It is amazing how few foreclosures there are right now, and there is no foreclosure crisis anywhere on the horizon.”

Zombie Foreclosures

A May report from ATTOM showed that “zombie” foreclosures had shrunk to an “even smaller portion of U.S. housing stock” in the second quarter of 2024.

Zombie foreclosures refer to pre-foreclosure properties abandoned by owners. Pre-foreclosure is the time between a “notice of default” sent to a homeowner and the auction or sale of that property.

Currently, only one out of every 14,724 homes in the United States is considered to be “zombie” homes, the lowest level since early 2021, according to ATTOM.

“Zombie foreclosures numbers remain so small that most neighborhoods around the country face little or no threat of the blight and decay those homes can spread,” the report said.

“The portion of pre-foreclosure properties that have been abandoned into zombie status, meanwhile, also went down slightly, from 3 percent in the first quarter of 2024 to 2.9 percent in the current quarter.”

According to Bankrate, foreclosure on a property can result in several negative consequences for the owner. For one, losing the property would mean the person would now have to find a new home while having a foreclosure on their record.

A foreclosure remains on a person’s credit report for seven years, damaging their creditworthiness and making it more difficult to secure loans.

And if the foreclosed property does not settle the debts the person owes, the individual will still have to pay the difference. If the owner does not pay the remaining debt, they can be sued.

“If you know that you are unable to make your mortgage payment for a given month, let your lender know as soon as possible,” Bankrate states.

“Your lender might set up a payment plan that involves more frequent but lower payments or deferral for a month or two.”