15+ Foreclosure Statistics to Give You Hope in 2021

Imagine this:

You can’t pay your mortgage. The lender takes it back. Cue stress and disappointment.

Unfortunately, this scenario is all too real, and foreclosure statistics show that millions of Americans experienced it during the 2008 financial crisis.

A decade after the recession, things were finally looking up. The foreclosure rate was at an all-time low… and then the pandemic hit.

Unemployment skyrocketed due to stay-at-home orders, and high unemployment usually leads to foreclosures. Fortunately, despite millions of delinquent mortgages, the rates are still low, and the numbers are actually improving.

Foreclosure moratoriums helped a lot with this, so even millions of delinquent mortgages aren’t in danger of becoming foreclosures. At least not yet.

So let’s look at some important statistics and how they’ll impact our future:

AMAZING Foreclosure Facts & Stats (Editor’s Pick):

  • 1 in 12,448 properties in the US are currently in foreclosure.
  • There were 214,323 active foreclosure cases nationwide during 2020.
  • Bank repossessions are down by 79% compared to last year.
  • The average time to foreclose is going up—it now takes an average of 830 days.
  • Vermont had the fewest foreclosure filings in Q3 2020.
  • South Carolina had the highest foreclosure rate in the country.

As you can see, it’s not all sunshine and roses. Contrary to the national trend, 30% of local markets are seeing a rise in foreclosures.

The US foreclosure properties have dropped by 49% compared to the pre-recession average.

But here’s the kicker:

In Maine, it’s 2194% higher! 

This is not an exception – states like Delaware, Maryland, Illinois, and Florida are experiencing a rise in their foreclosures. The same goes for 66 out of metropolitan areas.

People in San Antonio, for instance, are more likely to lose their homes to foreclosure than they were a year ago!

Is another housing market bubble rising, ready to burst?

Probably not.

Even with the regional differences and difficulties, foreclosure trends are looking great. If anything, we can expect the market to get more stable in the next decade!

Now let’s delve deeper into the current foreclosure data:

Foreclosure Trends Are Looking Up

Easy access to credit, exciting mortgage offerings, low-interest rates… Those were just a few of the things that caused the housing market burst, which, in turn, was a major factor in the 2008 financial crisis and the sheer number of foreclosures that ensued.

Have we gotten smarter? 

It looks like we have!

Fewer and fewer Americans are struggling to pay for their mortgage, and even pricier homes aren’t out of reach.

It seems like we’ve gotten savvier at choosing our mortgage, too:

Before the 2008 recession, only 57% of homeowners had done preliminary research online. Today, 92% of mortgage borrowers take that step before talking to a lender. While this shows how important the Internet has become, it’s also proof that Americans are getting smarter (and more cautious because we all remember the high foreclosure rates) about choosing their mortgage.

And what are the results? Pretty damn good:

1. Foreclosure activity was 90% lower in 2020, year-over-year. 

(Source: The Motley Fool)

Despite 3.4 million delinquent mortgages being over 90 days delinquent, the foreclosure activity remains low. Foreclosure stats show that the moratoriums put in place by federal and state agencies are preventing a lot of people from losing their homes.

2. In 2020, the number of foreclosures was at its lowest in 16 years.  

(Source: ATTOM Data Solutions)

There were 214,323 foreclosures in 2020; 57% down compared to last year and over ten times less than the peak of nearly 2.9 million in 2010.

Foreclosure rates are better than they were in 2005—well before the recession.

3. The number of repossessed properties is down by 33% from last year.  

(Source: ATTOM Data Solutions)

There is nothing more devastating for a family than losing their home. Financial struggles can lead to divorce, mental health issues, and homelessness.

Did you know that 64.4% of all homes are owner-occupied? If they couldn’t pay their mortgage, they would have nowhere to live. Lenders repossessed 34,432 properties in the US in the Q3 of 2019 alone.

Fewer repossessed properties = fewer Americans experiencing the struggle of losing their home.

Now isn’t that great news?

4. Foreclosure statistics show that the average foreclosure in Q3 of 2020 took 830 days.

(Source: ATTOM Data Solutions)

This is an increase of 21% compared to the previous quarter but a slight dip compared to the previous year. In general, the foreclosure processes are longer than ever, meaning that lenders are better off and they can afford longer grace periods, while people at risk of losing their home have more time to try and get back on their feet.

5. Vermont is the state with the lowest number of houses for foreclosure in the US. 

(Source: ATTOM Data Solutions)

Vermont had only one foreclosure filing for every 83,253 housing units and a total of four foreclosures in the third quarter of 2020. The state that’s closest is South Dakota, with one filing per 42,666 housing units and a total of 9 foreclosures in the same period.

It’s Not All Rosy on the Foreclosure Market 

To recap: everything is amazing, and the housing market is healthier than ever?

Well, yes, but actually no.

There are still plenty of problems that we’re dealing with, and we’re still not sure what’s gonna happen when moratoriums on foreclosures end. 

In addition, foreclosure statistics for Florida, New Jersey, and South Carolina show rates that are significantly higher than the national average. Families in these states are at a much greater risk of foreclosure

Is it serious? Probably.

The national average doesn’t tell us everything, and the gap between South Carolina and Vermont is pretty staggering. 

So what does the gap look like?

6. South Carolina has the highest foreclosure rate, with one foreclosure per 2,339 housing units.

(Source: ATTOM Data Solutions)

Illinois and New Mexico are next with one foreclosure per 3,031 and 3,079 housing units, respectively. Of the three, Illinois has the highest number of housing foreclosures at 1,764, it is followed by South Carolina with 965 total foreclosures, and New Mexico is last with 303 foreclosed properties.

7. Foreclosure timelines are shortest in Virginia, Minnesota, and Alaska.

(Source: ATTOM Data Solutions)

While the national average is 830 days, some states have exceptionally short foreclosure timelines. According to foreclosure data, in Virginia, Minnesota, and Alaska, it’s possible to lose one’s home in 180, 208, and 213 days respectively.

8. Without the moratoriums, foreclosures could increase by over 100%.

(Source: ATTOM Data Solutions)

When CARE act protections expire, mortgage foreclosures could more than double from the first quarter of 2021 to the second one. The biggest foreclosure spike will probably hit California, Colorado, and Massachusetts.

9. Mortgage delinquency rate is 89% higher than at the end of 2019.

(Source: Black Knight)

This, more than anything, shows just how precarious the situation is. Mortgage forbearances are preventing delinquent loans from entering foreclosures. Still, unless the borrowers’ financial situation improves by the time these protections expire, foreclosure statistics show that the market will be hit with an excess of seriously delinquent mortgages that will enter the pre-foreclosure stage.

Bottom line:

Some states are doing great, others are struggling, and the future is uncertain.

But do we have any actual reason to worry? Let’s try to use history to predict what is coming in 2021:

Historical Foreclosure Rates Vs Future Trends

Analyzing foreclosure rates by year helps us gain insight into what has happened and what we are yet to expect.

10. Foreclosure rate in 2006 was 0.58%.

(Source: ATTOM Data Solutions)

The total number of annual foreclosures just before the economic crisis started hitting hard was 717,552. In the year after that, the numbers almost doubled. And the year after that, they almost doubled again.

11. Foreclosure rates peaked in 2010 when they hit 2.23%.

(Source: ATTOM Data Solutions)

2010 was arguably the worst year for homeowners. Foreclosures skyrocketed in the aftermath of the financial crisis. The mind-blowing rate of 2.23% and a total of 2,871,891 foreclosed properties were unthinkable just a few years prior.

12. The pre-recession quarterly average of foreclosed properties between Q1 2006 and Q3 2007 was 278,912.

(Source: ATTOM Data Solutions) 

Right now, we are doing better than before the 2008 crisis. According to foreclosure stats The number of foreclosed properties dropped by 90% to 27,016 in Q3 of 2020.

The third quarter of 2020 is the 21st consecutive period where the average is going down.

13. 70% of homeowners believe it’s highly unlikely that they experience mortgage foreclosures.

(Source: Statista)

People are feeling safer now… Yet, not as safe as they should.

Granted, 70% of them couldn’t picture losing their homes because they couldn’t pay their mortgage.

But get that:

10% said it was very likely. 

The actual number of homes that receive foreclosure filings is under 1%!

While homeowners are more relaxed than they were before, they are still far too tangled up in finance-related anxiety. They are 10 times more afraid than they should be!

What is the lesson? There’s two, actually:

If you have a mortgaged house and you’re stressed about losing it, don’t be. Odds are that you will keep it.

Homeowners are more cautious (and yes, more worried) than they should be. As we saw, they are also spending more time researching mortgages and are generally savvier.

These high anxiety levels might just be a part of the overall improvement. If you’re careful about loans, you’re less likely to default, right?

14. Foreclosures by state dropped by up to 99% compared to the pre-recession average. 

(Source: ATTOM Data Solutions)

In Colorado and Nevada, there are now 99% fewer properties that receive a foreclosure warning. Compared to pre-recession data, foreclosures in Massachusetts and Michigan have decreased by 98%. Even South Carolina, which is currently rocking through a foreclosure rate surge, has seen a drop of 25% compared to the pre-recession period.

15. Mortgage debt reached $9.86 trillion in Q3 2020. 

(Source: Investopedia)

For most people, a new house means taking out a mortgage. Few people have enough money to just buy real estate, so 63% of Americans have borrowed money to finance their new home. And, while home mortgage debt had been falling until 2013, it’s on the rise again.

16. 46.7% of all active foreclosures are in the auction stage. 

(Source: RealtyTrac)

Foreclosure stats indicate that out of all foreclosures active in December 2020 in the US, 18.1% have been resolved and the ownership has reverted to the mortgage lender. The remaining 35.2% are still in the pre-foreclosure stage of the process.

Conclusion

On paper, the mortgage situation looks great, and foreclosure trends are promising, but appearances can be deceiving. Due to the protections implemented by various moratoriums and forbearance policies, many delinquent mortgages can’t enter the proper foreclosure stage, which may be lulling us into a false sense of security.

It remains to be seen what will happen when these protections expire and how the economy will handle the inevitable increase in foreclosure proceedings.

And there you have it: our recap of the 2021 foreclosure statistics.

What is your take on it? Do you think foreclosure trends are looking great? Or is there danger lurking in plain sight?

Let us know in the comments below!

FAQ

What Causes Mortgage Foreclosures?

Owners not paying their mortgage.

Just like any loan, a mortgage is a sum of money you receive that you return in monthly payments. You specifically borrow money to purchase real estate. The property itself secures the mortgage —if you can no longer pay your lender, they can take away the real estate.

These are the basic reasons for foreclosure—mortgage borrowers not paying back the loan.

Can the Bank Really Get Their Money Back? 

…. or are they being jerks and taking away people’s homes?

The answer is: yes, they can. They do this by selling the property through an auction.

The bidding usually starts at the amount that is owed for that house. This way, the lender can get back the money that the original owners couldn’t pay.

How About Buying a Foreclosure?

This could be a great deal since the original owners have paid back some of the owed amount.

You can buy foreclosures on the courthouse steps (sometimes literally, sometimes not). There are even options to finance them – even though they’re not strictly mortgages. Loans for foreclosures can be tricky to navigate, however, since most lenders require payment in cash on the day of the auction.

If you can afford to pay the amount in full, foreclosure properties are a great way to get a bargain price for beautiful real estate!

How Do I Find Foreclosures? 

There are multiple strategies for a successful foreclosure search. The easiest, of course, is working with a real estate agent to find a great deal. Since agents work on commission, though, it might be smarter to start with bank websites that list houses for foreclosure. You could also check the listings by the Department of Housing and Urban Development or the county website.

Is it worth paying for a foreclosure search service? It’s definitely much cheaper than an agent. RealtyTrac, for instance, offers up its database for under $50 a month. Just make sure you’ve checked the necessary foreclosure statistics before making any decisions.

ABOUT AUTHOR

Christo is a bachelor in Economics, but he found a passion for crafting web content. He sees SpendMeNot as an opportunity to create engaging articles and help readers make informed financial decisions.

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