The “Looking Glass” reflects on economic and real estate trends through two distinct lenses: the “glass half full” of optimists and the “glass half empty” of pessimists.
Buzz: The number of foreclosed homes has jumped 116% in a year in California as restrictions on lenders’ ability to act against seriously delinquent borrowers end. The US figure was even higher, with a 153% increase.
Debate: Are eye-catching jumps in foreclosure activity a sign of financial trouble? Or simply a return to more normal levels of hardship for borrowers as pandemic-era homeowner protections expire?
Source: My trusty spreadsheet took a look at homes somewhere in the process of foreclosure in the first six months of 2022 using data compiled by real estate data tracker ATTOM.
California ranked No. 2 in the nation with 16,340 homes somewhere in the process of foreclosure. Florida was in first place with 17,624 troubled home loans. After California was Illinois with 14,086, Texas with 11,527 and Ohio with 11,028.
glass half full
Let’s look at this level of distressed borrowers relative to the number of all housing units.
Using this measure of frequency, California ranked 14th with a home in foreclosure for 881 units statewide compared to a rate of 854 nationwide. The most common? There is a distressed borrower in Illinois for 385 residences, then New Jersey at 410, Ohio at 475, Delaware at 497 and South Carolina at 513.
Where are the rare foreclosure deposits? South Dakota led the way, with one household in 9,068, followed by Vermont at 7,598, North Dakota at 4,466, West Virginia at 3,626 and the District of Columbia at 3,539.
California’s big rivals Texas were No. 19 at 1,005 and Florida was No. 6 at 560.
Glass half empty
Given the occasion, after about two years of foreclosure moratoriums, lenders are taking action. California ranked only 36th with its 116% jump in lockdown activity from the first half of 2021.
The largest jumps were seen in Colorado at 595%, followed by Michigan at 497%, Minnesota at 268%, New Jersey at 245%, and New York at 227%,
The best performers were in Alaska, down 1%, followed by South Dakota up 2%, Kentucky up 12%, North Dakota up 43% and New Mexico in 48% increase.
Texas was No. 6, up 187% while Florida was No. 28, up 124%.
“We are just seeing a jump from artificial lows due to government intervention doing its job preventing millions of unnecessary foreclosures across the country,” says ATTOM analyst Rick Sharga, who notes that the seizure activity is 40% less than what is considered normal.
Looking ahead, CoreLogic reported that 1.9% of California mortgages were in trouble – 30 days past due or more – in May, half of 3.8% in May 2021.
Similar trends were seen in the state’s major metropolitan areas – Los Angeles-Orange County, 1.9%, up from 4.1% last year; Inland Empire, 2.6% vs. 4.8%; San Diego, 1.6% of 3.4&; and San Francisco, 1.3% versus 2.8%.
At the end of the line
The generosity of lenders and government assistance gave borrowers in financial difficulty many chances to avoid losing their homes as the coronavirus cooled the economy.
The robust economic rebound from the lockdown turmoil has created big jumps in home values, suggesting a huge marketing-crushing wave of foreclosures is unlikely at this point. Jumps in foreclosures were expected as protections ended for late payers.
But think about activity in the first half of 2022 compared to two years ago – at the start of the pandemic era – when we saw enormous economic uncertainty and the launch of government assistance for struggling borrowers. and moratoriums on seizures.
Nationally, foreclosure activity is down 1% over two years. California foreclosures are down 9% in two years – ranked 28th among states.
The largest increases were seen in Montana at 73%, Colorado at 62%, South Dakota at 54%, Minnesota at 50% and Nevada at 46%.
The largest declines were seen in Vermont, down 63%, then the District of Columbia, down 51%, Maryland, down 44%, Alaska, down 43%, and the New Mexico, down 40%.
Texas was No. 26, down 5%, and Florida was No. 11, up 12%.
If you need help
The end of foreclosure stops doesn’t mean troubled borrowers in California can’t get help.
The California Mortgage Relief Program is distributing $1 billion in federal funds to cover missed housing payments — up to $80,000 for mortgage relief and up to $20,000 for property tax relief — for households earning up to 50% more than a region’s median income. The application is free and the services received must never be reimbursed.
The relief has been expanded to include homeowners who missed payments in the first half of 2022, with greater income eligibility and covers overdue property taxes for more homeowners.
Jonathan Lansner is a business columnist for the Southern California News Group. He can be contacted at [email protected]