For the past several years, foreclosure filings have been at historically low levels due to mortgage forbearance. For those that may not be aware of mortgage forbearance, this is when a mortgage lender allows a borrower to temporarily pay their mortgage at a lower payment or pause their payments altogether for a period of time. Of course, these payment reductions or paused payments will still need to be paid back at a later date.
During the peak of the COVID-19 pandemic when the U.S. entered into voluntary shutdowns, many Americans were left without the ability to work or produce an income. During this time, the federal government initiated various assistance programs, including mortgage forbearance. The result of this was that many Americans were able to stay in their homes and avoid foreclosure. With this said, this dropped the national foreclosure rate to extremely low levels. Now as of mid-2022, we are seeing foreclosure filings beginning to increase once again. In fact, many estimates predict the national foreclosure rate to return to normal ‘pre-pandemic’ levels by early 2023.
How does Florida rank with foreclosures?
According to ATTOM Data Solutions‘ Midyear 2022 U.S. Foreclosure Market Report, 164,581 U.S. properties had foreclosure filings, which includes default notices, scheduled auctions or bank repossessions. As for Florida, The Sunshine State ranks sixth nationwide, with one foreclosure for every 560 homes with a loan. As for the top 10 states with the highest foreclosure rate in the first half of 2022, they were as follows:
- #1. Illinois: (0.26% of housing units with a foreclosure filing)
- #2. New Jersey: (0.24%)
- #3. Ohio: (0.21%)
- #4. Delaware: (0.20%)
- #5. South Carolina (0.19%)
- #6. Florida: (0.18%)
- #7. Nevada: (0.18%)
- #8. Indiana: (0.16%)
- #9. Georgia: (0.13%)
- #10. Michigan: (0.13%)
Overall, foreclosures are up by 153% year-over-year as compared to the first six months of 2021. With this said, this increase is completely expected due to the artificially low number of foreclosure filings last year due to government orders of mortgage forbearance. It is also important to note that much of the foreclosure activity that we are seeing today is on loans that were either already in foreclosure or were more than 120 days delinquent prior to the pandemic. If it were not for the fact that many of these delinquent loans were protected by the government moratorium, they would have already been foreclosed on. Moving forward, it is largely expected that foreclosure rates will continue to increase to historical levels. The wild card will be how deep of a recession the U.S. sinks to and how long it lasts?
Are you thinking about investing in South Florida real estate? As a South Florida native, nobody knows the South Florida market better than Natasha Moore. Contact her or any of our Live South Florida Realty, Inc. team members today! In the meantime, be sure to download the Florida Home Search App today to begin searching the MLS right on your mobile device!