There’s no doubt about it, 2016 was a bright spot for foreclosures, the best year since 2006. The latest figures from ATTOM Data Solutions show that in 2016 there were 933,045 foreclosure filings of all sorts — default notices, scheduled auctions and bank repossessions.
That’s down almost 14 percent from 2015.
“The national foreclosure rate stayed within an historically normal range for the third consecutive year in 2016, even as banks continued to clear out legacy foreclosures from the last housing bubble, particularly in the final quarter of the year,” said Daren Blomquist, senior vice president at ATTOM Data Solutions, the new parent company of RealtyTrac.
Actually, though, the latest foreclosure numbers understate some very good real estate news
First, the 2016 foreclosure figures wildly overstate the current condition of the real estate marketplace. It’s MUCH better than the numbers suggest,
“A total of 478,857 U.S. properties started the foreclosure process in 2016,” says the company, “down 16 percent from 2015 and down 78 percent from the peak of 2,139,005 foreclosure starts in 2009 to the lowest level since ATTOM began tracking foreclosure starts in 2006.”
Nationwide, says Attom, “55 percent of all loans actively in foreclosure as of the end of 2016 were originated between 2004 and 2008.”
In other words, most of today’s foreclosures are actually rooted in the go-go lending years when no-doc loans, stated income loan applications, and option ARMs were widely marketed by mortgage lenders.
|Year||Foreclosure Filings||Annual Change|
|2016||933,045||down 13.89 percent|
|2015||1,083,572||down 3.0 percent|
|2014||1,117,426||down 17.94 percent|
|2013||1,361,795||down 25.85 percent|
|2012||2,304,941||down 14.59 percent|
|2011||2,698,967||down 29.45 percent|
|2010||3,825,637||down 3.33 percent|
|2009||3,957,643||up 25.33 percent|
|2008||3,157,806||up 43.32 percent|
|2007||2,203,295||up 74.99 percent|
|2006||1,259,118||up 42.20 percent|
Second, fewer foreclosures are not the result of magic. They reflect the very real benefits of the Dodd-Frank mortgage requirements, including the ability-to-repay rule and the qualified mortgage (QM) standards.
Not only has Dodd-Frank been good for borrowers, it has been very good for lenders. According to the FDIC, bank profits reached $45.6 billion in the third quarter, nearly doubt the $23.8 during the third quarter of 2010, just after the passage of Dodd-Frank.
Foreclosures and Mortgage Rates
Investors understand that in a time when economies are troubled and turbulent worldwide, US mortgages are about as risk-free as any financial option. Don’t believe it? Just look at the foreclosure numbers.
Little risk, of course, is one reason mortgage rates have been in a ditch since 2011.
(Photo courtesy of Skylar Smith)
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