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Shadow Inventory Down 23 Percent, Foreclosure Inventory Shrinks 35 Percent

Shadow Inventory Down 23 Percent, Foreclosure Inventory Shrinks 35 Percent

The numbers of foreclosures and potential foreclosures have fallen dramatically over the past 12 months as the foreclosure picture rapidly returns to pre-2006 levels.  The decline in foreclosures in the pipeline has important ramifications for real estate investors and local markets that are returning to health as they recover from the foreclosure flood that produced 4.9 million foreclosures since 2008.

CoreLogic reported today that as of February 2014, approximately 752,000 homes in the United States were in some stage of foreclosure, known as the foreclosure inventory, compared to 1.2 million in February 2013, a year-over-year decrease of 35 percent. Month over month, the foreclosure inventory was down 3.3 percent from January 2014. The foreclosure inventory as of February represented 1.9 percent of all homes with a mortgage, compared to 2.9 percent in February 2013.

At the end of February 2014, there were 1.9 million mortgages, or 4.9 percent, in serious delinquency, defined as 90 days or more past due, including those loans in foreclosure or real estate owned (REO) that there were 43,000 completed foreclosures in the United States in February 2014, down from 51,000 in February 2013, a year-over-year decrease of 15 percent. On a month-over-month basis, completed foreclosures decreased 13.1 percent from 50,000 in January 2014.

The national residential shadow inventory was 1.7 million homes as of January 2014 compared to 2.2 million in January 2013, a year-over-year decrease of 23 percent.

“Although there is good news that completed foreclosures are trending lower, the bigger news is the impressive decline in the foreclosure and shadow inventories,” said Dr. Mark Fleming, chief economist for CoreLogic. “Every state has had double-digit, year-over-year declines in foreclosure inventory, which is reflected in the $70 billion decline in the shadow inventory.”

“The stock of seriously delinquent homes and the foreclosure rate are back to levels last seen in the final quarter of 2008,” said Anand Nallathambi, president and CEO of CoreLogic. “The shadow inventory has also declined year over year for the past 3 years as the housing market continues to heal, including double-digit declines for the past 16 consecutive months.”

Foreclosure Highlights:

•            The five states with the highest number of completed foreclosures for the 12 months ending February 2014 were Florida (118,000), Michigan (50,000), Texas (39,000), California (37,000) and Georgia (34,000).These five states accounted for almost half of all completed foreclosures nationally.

•            Four states and the District of Columbia experienced the lowest number of completed foreclosures for the 12 months ending February 2014: The District of Columbia (60), North Dakota (421), Hawaii (519), West Virginia (571) and Wyoming (705).

•            The five states with the highest foreclosure inventory as a percentage of all mortgaged homes as of February 2014 were New Jersey (6.2 percent), Florida (6.0 percent), New York (4.7 percent), Maine (3.4 percent) and Connecticut (3.2 percent).

•            The five states with the lowest foreclosure inventory as a percentage of all mortgaged homes as of February 2014 were Wyoming (0.3 percent), Alaska (0.4 percent), North Dakota (0.5 percent), Nebraska (0.5 percent) and Colorado (0.6 percent).

Shadow Inventory Highlights:

•            The value of shadow inventory was $254 billion as of January 2014, down from $324 billion a year ago and down from $289 billion six months ago.

•            As of January 2014, year-over-year inventory of seriously delinquent homes decreased in all states by double digits. Twenty-four states experienced year-over-year declines in serious delinquency by at least 20 percent.

•            The shadow inventory is down 22 percent compared to January 2013.

•            Over the 12 months ending January 2014, shadow inventory has been decreasing at an average monthly rate of 41,000 units.

•            As of January 2014, Florida, California, New York, New Jersey and Illinois carried 42 percent of all distressed properties in the country. Florida continues to account for 15 percent of the nation’s distressed properties.

CoreLogic estimates the current stock of properties in the shadow inventory, also known as pending supply, by calculating the number of properties that are seriously delinquent, in foreclosure or held as REO by mortgage servicers but not currently listed on multiple listing services (MLSs). Transition rates of “delinquency to foreclosure” and “foreclosure to REO” are used to identify the currently distressed, unlisted properties most likely to become REO properties. Properties that are not yet delinquent, but may become delinquent in the future, are not included in the estimate of the current shadow inventory. Shadow inventory is typically not included in the official reporting measurements of unsold inventory.

*January data was revised. Revisions are standard, and to ensure accuracy, CoreLogic incorporates newly released data to provide updated results.

Judicial Foreclosure States Foreclosure Ranking (Ranked by Completed Foreclosures):

Judicial States    February 2014

Foreclosure Inventory   Foreclosure Inventory Pct. Point Change from a Year Ago         Completed Foreclosures (12 months ending February 2014)              Serious Delinquency Rate

National             1.9%      -1.0%    606,072              4.9%

Florida  6.0%      -3.9%    117,564              10.6%

Ohio      1.9%      -1.1%    28,201 5.3%

Illinois   2.7%      -1.8%    24,210 6.3%

Indiana 1.8%      -1.0%    16,673 4.9%

Pennsylvania     2.3%      -0.5%    14,967 5.6%

Oklahoma          1.8%      -0.9%    10,631 4.5%

South Carolina  1.9%      -1.1%    8,523    4.7%

Louisiana            1.5%      -0.7%    7,190    5.1%

Maryland           2.8%      -0.7%    6,307    6.8%

New Jersey        6.2%      -1.0%    5,888    10.3%

New York           4.7%      -0.4%    4,846    7.8%

Iowa     1.3%      -0.7%    4,722    3.2%

Connecticut       3.2%      -0.9%    4,706    6.5%

Kansas  1.0%      -0.4%    4,663    3.6%

Massachusetts  1.3%      -0.6%    2,902    4.6%

New Mexico      2.2%      -0.9%    2,360    4.7%

Kentucky            1.6%      -0.6%    2,158    4.4%

Nebraska            0.5%      -0.3%    1,687    2.3%

Delaware           2.4%      -0.6%    1,541    6.0%

Maine   3.4%      -1.0%    891        6.5%

Hawaii  3.2%      -0.7%    519        5.0%

North Dakota    0.5%      -0.2%    421        1.2%

South Dakota    0.7%      -0.4%    N/A       2.0%

Vermont             1.9%      -0.6%    N/A       3.8%

Source: CoreLogic February 2014

Non-Judicial Foreclosure States Foreclosure Ranking (Ranked by Completed Foreclosures):

Non-Judicial States         February 2014

Foreclosure Inventory   Foreclosure Inventory Pct. Point Change from a Year Ago         Completed Foreclosures (12 months ending February 2014)              Serious Delinquency Rate

National             1.9%      -1.0%    606,072              4.9%

Michigan            0.8%      -0.6%    49,803 3.6%

Texas    0.8%      -0.4%    38,713 3.6%

California           0.7%      -0.6%    37,340 2.6%

Georgia 1.1%      -0.8%    33,503 5.0%

North Carolina  1.1%      -0.9%    25,841 4.1%

Arizona 0.6%      -0.7%    19,028 2.5%

Washington       1.7%      -0.7%    18,998 4.4%

Tennessee         0.8%      -0.5%    17,878 4.6%

Missouri             0.7%      -0.4%    14,121 3.4%

Virginia 0.7%      -0.3%    12,114 2.9%

Nevada 2.6%      -1.9%    10,198 7.0%

Colorado            0.6%      -0.4%    8,505    2.1%

Wisconsin          1.0%      -0.7%    8,298    3.0%

Minnesota         0.6%      -0.5%    7,999    2.6%

Alabama             1.1%      -0.3%    7,630    5.1%

Arkansas            1.2%      -1.1%    5,746    5.3%

Utah      0.8%      -0.7%    4,257    2.9%

Idaho    1.3%      -0.8%    3,751    3.2%

Oregon 2.2%      -0.7%    3,233    4.3%

New Hampshire              0.8%      -0.4%    1,935    3.3%

Rhode Island     2.1%      -0.9%    1,488    6.4%

Mississippi         1.2%      -0.8%    1,024    6.3%

Montana            0.6%      -0.3%    932        1.8%

Alaska   0.4%      -0.3%    809        1.6%

Wyoming           0.3%      -0.2%    705        1.7%

West Virginia     0.8%      -0.4%    571        3.1%

District of Columbia       1.9%      -0.3%    60          4.9%

Source: CoreLogic February 2014

Foreclosure Data for the Largest Core Based Statistical Areas (CBSAs) Based on Population (Ranked by Completed Foreclosures):

CBSA     February 2014

Foreclosure Inventory   Foreclosure Inventory Pct. Point Change from a Year Ago         Completed Foreclosures (12 months ending February 2014)              Serious Delinquency Rate

Atlanta-Sandy Springs-Roswell, GA         1.1%      -1.0%    19,927 5.1%

Tampa-St. Petersburg-Clearwater, FL     6.9%      -3.6%    17,360 11.5%

Chicago-Naperville-Arlington Heights, IL              3.2%      -2.2%    13,664 7.2%

Orlando-Kissimmee-Sanford, FL              6.0%      -4.0%    12,159 10.5%

Phoenix-Mesa-Scottsdale, AZ     0.6%      -0.8%    11,363 2.3%

Houston-The Woodlands-Sugar Land, TX             0.8%      -0.4%    9,439    3.5%

Riverside-San Bernardino-Ontario, CA   1.0%      -0.8%    7,996    3.9%

St. Louis, MO-IL 0.9%      -0.4%    7,707    3.7%

Charlotte-Concord-Gastonia, NC-SC       1.3%      -1.4%    7,691    4.4%

Dallas-Plano-Irving, TX  0.8%      -0.4%    6,787    3.7%

Minneapolis-St. Paul-Bloomington, MN-WI         0.6%      -0.6%    6,660    2.6%

Warren-Troy-Farmington Hills, MI          0.6%      -0.5%    6,653    2.8%

Seattle-Bellevue-Everett, WA     1.4%      -0.8%    6,473    3.6%

Los Angeles-Long Beach-Glendale, CA    0.7%      -0.6%    5,961    2.9%

Washington-Arlington-Alexandria, DC-VA-MD-WV          1.5%      -0.5%    4,516               4.1%

Denver-Aurora-Lakewood, CO   0.5%      -0.4%    3,715    2.0%

Sacramento-Roseville-Arden-Arcade, CA             0.7%      -0.6%    3,331    2.6%

New York-Jersey City-White Plains, NY-NJ            4.9%      -0.9%    3,118    8.1%

Baltimore-Columbia-Towson, MD           2.9%      -0.5%    2,778    7.0%

Portland-Vancouver-Hillsboro, OR-WA  1.8%      -0.7%    2,332    3.8%

Oakland-Hayward-Berkeley, CA 0.5%      -0.5%    2,166    2.1%

San Diego-Carlsbad, CA 0.5%      -0.5%    2,071    2.1%

Anaheim-Santa Ana-Irvine, CA  0.4%      -0.5%    1,434    1.6%

Newark, NJ-PA  6.3%      -1.3%    1,233    10.2%

Nassau County-Suffolk County, NY          6.0%      -0.6%    917        9.7%

Source: CoreLogic February 2014

 

 

 

 

 

Foreclosure Inventory Methodology

The data in this report represents foreclosure activity reported through February 2014.

This report separates state data into judicial vs. non-judicial foreclosure state categories. In judicial foreclosure states, lenders must provide evidence to the courts of delinquency in order to move a borrower into foreclosure. In non-judicial foreclosure states, lenders can issue notices of default directly to the borrower without court intervention. This is an important distinction because judicial states, as a rule, have longer foreclosure timelines, thus affecting foreclosure statistics.

A completed foreclosure occurs when a property is auctioned and results in the purchase of the home at auction by either a third party, such as an investor, or by the lender. If the home is purchased by the lender, it is moved into the lender’s real estate owned (REO) inventory. In “foreclosure by advertisement” states, a redemption period begins after the auction and runs for a statutory period, e.g., six months. During that period, the borrower may regain the foreclosed home by paying all amounts due as calculated under the statute. For purposes of this Foreclosure Report, because so few homes are actually redeemed following an auction, it is assumed that the foreclosure process ends in “foreclosure by advertisement” states at the completion of the auction.

The foreclosure inventory represents the number and share of mortgaged homes that have been placed into the process of foreclosure by the mortgage servicer. Mortgage servicers start the foreclosure process when the mortgage reaches a specific level of serious delinquency as dictated by the investor for the mortgage loan. Once a foreclosure is “started,” and absent the borrower paying all amounts necessary to halt the foreclosure, the home remains in foreclosure until the completed foreclosure results in the sale to a third party at auction or the home enters the lender’s REO inventory. The data in this report accounts for only first liens against a property and does not include secondary liens. The foreclosure inventory is measured only against homes that have an outstanding mortgage. Homes with no mortgage liens can never be in foreclosure and are, therefore, excluded from the analysis. Approximately one-third of homes nationally are owned outright and do not have a mortgage. CoreLogic has approximately 85 percent coverage of U.S. foreclosure data.

One comment

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