More than a decade has passed since the foreclosure disaster in the United States. Linked to the Great Recession, one of the main causes was that too many Americans with poor credit ratings were being granted variable rate mortgages. As rates rose and many lost their jobs, they couldn’t make monthly mortgage payments. Banks faced defaults and eventually owned tens of thousands of homes they couldn’t handle. Entire neighborhoods had vacant homes where people were being squeezed out by these banks.
The foreclosure problem has returned, but not as high as in 2008 and 2009. According to recent analysis by real estate data provider ATTTOM, foreclosure filings hit a post-pandemic high in the first quarter of 2022, at 78,271, in increase of 39% compared to the previous quarter and 132% compared to the same period last year. To find the state with the most foreclosures, 24/7 Wall St. looked at 2021 and 2022 foreclosure data provided by ATTOM Data Solutions. States are ranked by the number of foreclosures per 100,000 dwellings.
Foreclosure activity is still 57% lower than it was in the first three months of 2020, but the return to normal is fast approaching. Foreclosures have declined in the 12 months to March 2022 in just three states – Alaska and the Dakotas – while foreclosure activity has jumped more than 200% in five states – New York, New Jersey, Colorado, Nevada and Michigan. Foreclosure activity jumped nearly 500% in Nevada and Michigan. Nationally, foreclosure activity increased by 135%.
Chicago, New York, Los Angeles, Houston and Philadelphia had the highest number of foreclosures. For cities with populations under 200,000, the highest foreclosure rates were in Cleveland, Ohio; Atlantic City, New Jersey; Jacksonville, North Carolina; Rockford, Ill.; and Columbia, South Carolina.
In three states — Wyoming, Louisiana and Mississippi — underwater mortgages accounted for between 10% and 17% of all mortgages, the most among the states. An underwater mortgage is when a home is worth less than the money owed on the mortgage.
The state with the highest foreclosure rate is Illinois. Here are the details:
> Foreclosure rate, Q1 2022: 126.4 per 100,000 housing units
> Chg. seizures, Q1 2021 to Q1 2022: +178.4%
> Severely underwater mortgages, Q1 2022: 7.2%
> Total housing: 5,426,429
Click here to read the states with the worst foreclosure rates