In November, 30,677 properties nationwide received some sort of foreclosure filing, such as a notice of default or foreclosure plan due to a homeowner defaulting on a mortgage, according to a recent report from the Real Estate Data Corp. This is a 57 percent increase from a year ago.
There were 3,770 completed foreclosures during the month, up 64 percent compared to last year.
While such a large spike may seem harsh, it is not a sign of another foreclosure crisis on the horizon.
During the COVID-19 pandemic, a nearly two-year moratorium on foreclosures was imposed on those with government-backed mortgages.
Many lenders also extended these protections to other borrowers to protect homeowners who lost their jobs or other income during the pandemic.
The result has been an increase in the number of foreclosure filings now that proceedings are underway again.
But the number of foreclosures is still lower than in the pre-pandemic period.
Foreclosure activity will not reach pre-pandemic levels until mid to late 2023.
Even then, it should not represent a concern for the housing market as a whole - which is a great comfort to anyone who remembers the foreclosure crisis of a decade ago.
There is no question that the quality of loans today is far superior to those that defaulted and triggered the housing market collapse and the Great Recession.
Many of the non-performing loans that suddenly ballooned in size in the wake of the housing collapse have since been eradicated, and it is now much harder to qualify for a mortgage.
The report notes that mortgage delinquency rates remain below historical averages and that the job market remains strong.
Another big positive is the record level of homeowner equity, which now stands at $29 trillion.
About 93 percent of foreclosed borrowers have equity in their homes.
This is the exact opposite of 2008, when 30% of homeowners and almost all foreclosed individuals were late on their loans.
Equity matters because homeowners with equity have the ability - and the incentive - to refinance into a different mortgage, which may be easier for them to pay.
If they have to sell, they have the opportunity to walk away with some money rather than nothing.
The report also noted that foreclosure filings were down 5 percent compared to October.
This month could be a high point for the year, as lenders typically hold off on foreclosure activity in December in anticipation of the holiday season.
States where lenders initiated the most foreclosure proceedings in November included California, with 2,244; Texas, with 2,114; Florida, with 1,709; and New York, with 1,575.
By comparison, the highest foreclosure rates in November were in Illinois, Delaware, New Jersey and South Carolina.
