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Foreclosures Spike After Moratorium Ends

Katie Jensen
Sep 15, 2021

15,838 total U.S. property foreclosure filings in August, up 27% from the previous month and up 60% from last year.

KEY TAKEAWAYS
  • There were a total of 15,838 U.S. properties foreclosure filings, up 27% from the previous month and up 60% from last year.
  • States that had the highest foreclosure rates were Illinois, Nevada, and New Jersey.
  • Lenders began the foreclosure process on 8,348 U.S. properties in August 2021, up 27% from last month and up 49% from a year ago.

ATTOM released its August 2021 U.S. Foreclosure Market Report, which shows there were a total of 15,838 U.S. properties foreclosure filings, up 27% from the previous month and up 60% from last year. The dramatic spike in foreclosure filings transpired just over a few days, immediately following the Supreme Court’s decision to end the moratorium on August 26, 2021.

In some regions, local eviction courts have become flooded with new cases. Indiana local news outlet, WHTR, reported that in Pike Township, the docket was full for Tuesday with 79 out of 109 cases solely for evictions, which is about 72% of the hearings. Statewide, there are over 93,000 people behind on rent, which totals to over $190 million in rent debt. In Missouri, there are approximately 94,000 households behind on payments, all of whom are vulnerable to eviction or foreclosure now that the moratorium has expired, according to National Equity Atlas. 

According to ATTOM, the states that had the highest foreclosure rates were Illinois, Nevada, and New Jersey. In Illinois, one in every 3,848 housing units was issued a foreclosure filing; In Nevada, one in every 4,738 housing units had a foreclosure filing; and in New Jersey, one in every 4,868 housing units had a foreclosure filing. Foreclosure filings encompass default notices, scheduled auctions or bank repossessions.

“As expected, foreclosure activity increased as the government’s foreclosure moratorium expired, but this doesn’t mean we should expect to see a flood of distressed properties coming to market,” said Rick Sharga, executive vice president at RealtyTrac, an ATTOM company. “We’ll continue to see foreclosure activity increase over the next three months as loans that were in default prior to the moratorium re-enter the foreclosure pipeline, and states begin to catch up on months of foreclosure filings that simply haven’t been processed during the pandemic. But it’s likely that foreclosures will remain below normal levels at least through the end of the year.”

Lenders began the foreclosure process on 8,348 U.S. properties in August 2021, up 27% from last month and up 49% from a year ago. States that had the greatest number of foreclosure starts in August were California (1,240 foreclosure starts), Texas (1,060), Florida (643), Illinois (506), and New York (479). Additionally, lenders repossessed 2,474 U.S. properties through completed foreclosures in August, up 2% from last month and up 22% year-over-year. 

“Both last year’s and last month’s foreclosure starts were artificially low due to the government’s moratorium,” Sharga noted. “But in August of 2019, the last year we had ‘normal’ foreclosure activity, there were almost 28,000 foreclosure starts – over three times more than this year.”

Only a few months ago, the foreclosure rate hit its lowest in over two decades, but now rates are expected to return to pre-pandemic levels. Although this may come as a relief for landlords and lenders who now get to address a backlog of foreclosures, this will be a rude awakening for renters and homeowners who have yet to get their finances back on track. The numbers and data provided above reflect the first month since the government moratorium was lifted.

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