CoreLogic Issues US Residential Foreclosure Crisis Decade in Review
Analysis Shows Extent of Recovery Gains in the US Housing Market
IRVINE, Calif., March 14, 2017—CoreLogic®, a leading global property information, analytics and data-enabled solutions provider, today released a 10-year retrospect of the U.S. residential foreclosure crisis, "United States Residential Foreclosure Crisis: 10 Years Later." The report examines the path of the residential foreclosure crisis beginning with the relatively healthy years early in the 2000s, through the peak of the crisis, to present day. The country has started to normalize, recording approximately 22,000 completed foreclosures a month. Completed foreclosures reflect the total number of homes lost to foreclosure.
The foreclosure crisis began in some parts of the country as early as 2007 and later peaked nationwide in September 2010, with approximately 120,000 completed foreclosures occurring during that single month. Throughout the crisis years, CoreLogic monitored completed foreclosures, the foreclosure inventory and the serious delinquency rate. Many economists mark the beginning of the foreclosure crisis with the collapse of two Bear Stearns subprime funds in June 2007, with the crisis deepening as a result of the Lehman Brothers bankruptcy in September 2008. Since the beginning of 2007, there have been approximately 7.8 million completed foreclosures nationally. Beginning in Q2 2004 when homeownership rates peaked, there have been approximately 8.6 million homes lost to foreclosure.
At the end of 2016, the national foreclosure inventory, which reflects all homes in some stage of the foreclosure process, included approximately 336,000, or 0.9 percent, of all homes with a mortgage compared with 1.4 million homes, or 3.3 percent, at the peak of the residential foreclosure crisis in September 2010.
"The country experienced a wild ride in the mortgage market between 2008 and 2012, with the foreclosure peak occurring in 2010," said Dr. Frank Nothaft, chief economist for CoreLogic. "As we look back over 10 years of the foreclosure crisis, we cannot ignore the connection between jobs and homeownership. A healthy economy is driven by jobs coupled with consumer confidence that usually leads to homeownership."
During the housing crisis, CoreLogic also reported the number of mortgages in serious delinquency, defined as 90 days or more past due, including loans in foreclosure or REO. The delinquency rate (payments past due by 30, 60 or 90 days) continues to be a leading indicator of troubled markets. At the end of 2016, 1 million mortgages, or 2.6 percent of homes with a mortgage, were in serious delinquency, compared to the serious delinquency peak of 3.7 million mortgages, or 8.6 percent of homes with a mortgage, were in serious delinquency, in January 2010. In recent years, the decline in serious delinquencies has been geographically broad throughout the country with year-over-year decreases from December 2015 to December 2016 in 48 states and the District of Columbia.
Highlights of the Residential Foreclosure Crisis:
- The national completed foreclosure total peaked in 2010 with approximately 1.2 million foreclosures for the year; closely followed by just over 1 million completed foreclosures in 2009.
- From the peak in 2010, the completed foreclosures steadily declined each year, dropping by nearly 100,000 completed foreclosures per year through 2016.
- The state with the highest percent of mortgages in the foreclosure inventory was Florida, during June 2011, with 12.5 percent of homes in some stage of the foreclosure process.
- Of the 10 largest Core Based Statistical Areas (CBSAs) as measured by population, Miami-Miami Beach-Kendall, FL had the highest percent of all homes with a mortgage in the foreclosure inventory at its peak in February 2011.
*2016 data was revised. Revisions are standard, and to ensure accuracy CoreLogic incorporates newly released data to provide updated results.
**Unemployment data provided by the Bureau of Labor Statistics (BLS). City boundaries may not be identical as CoreLogic uses Core Based Statistical Areas (CBSAs) as defined by the Office of Management and Budget (OMB).
The data in this report represents foreclosure activity reported through December 2016.
This report separates state data into judicial versus 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 since 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. Generally, homes with no mortgage liens are not subject to 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.
CoreLogic (NYSE: CLGX) is a leading global property information, analytics and data-enabled solutions provider. The company's combined data from public, contributory and proprietary sources includes over 4.5 billion records spanning more than 50 years, providing detailed coverage of property, mortgages and other encumbrances, consumer credit, tenancy, location, hazard risk and related performance information. The markets CoreLogic serves include real estate and mortgage finance, insurance, capital markets, and the public sector. CoreLogic delivers value to clients through unique data, analytics, workflow technology, advisory and managed services. Clients rely on CoreLogic to help identify and manage growth opportunities, improve performance and mitigate risk. Headquartered in Irvine, Calif., CoreLogic operates in North America, Western Europe and Asia Pacific. For more information, please visit www.corelogic.com.