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Foreclosure starts tick up in July

Mortgage delinquencies moved lower this summer, but there has been a rare uptick in foreclosure starts, according to the latest tracking data.

Foreclosure starts in July clocked in at a three-month high of 48,263 starts, up 11 percent from the June level, Black Knight reported. One caveat, though: June’s level of 43,454 foreclosure starts was a 17-year low. This July’s foreclosure-starts total was lower compared to a year earlier, and was running behind levels seen in the early 2000s, Black Knight said. The company also reported that July’s delinquency rate of 3.6 percent was the lowest in 12 years.

forecloseAttom Data Solutions also reported this month that foreclosure starts rose in 96 of the 219 metros it tracks. In 33 metros, including Los Angeles, Miami and several other cities with strong economies, foreclosures starts have increased year over year for three consecutive months.

For its coverage area, Attom identified 30,187 foreclosure starts, which was up slightly from a year ago. This was the first year-over-year increase in foreclosure starts in three years.

Attom Senior Vice President Daren Blomquist told Scotsman Guide News last week that foreclosure starts would likely edge up from abnormally low levels. He noted that lenders have been taking some additional risk, and this will likely produce a modest increase in foreclosure starts.

“The pendulum has started to swing back from lenders being extremely risk adverse to gradually introducing a little more risk to their lending,” Blomquist said. “That is naturally resulting in an uptick in foreclosures. Right now, even with the increases, we are well below anything approaching crisis levels, but it is certainly something to keep an eye on,” Blomquist said.

On Tuesday, CoreLogic reported that the foreclosure-inventory rate — or the share of mortgages in some stage of foreclosure — fell to 0.5 percent in June, and was the lowest foreclosure-inventory rate for June since 2006. Hurricane-affected Florida, Texas and Puerto Rico have seen a significant uptick in serious delinquencies, or properties 90 days past due, however.

“A solid labor market enables more homeowners to remain current on their mortgage,” said Frank Nothaft, chief economist for CoreLogic. “The national unemployment rate in June 2018 was 4 percent, the lowest for June in 18 years.

"While this has helped reduce delinquencies nationally, delinquency rates in areas hit by wildfires, hurricanes or other natural disasters have jumped as families deal with financial disruption and tragedy,” Nothaft added. “The loss of housing and displacement of families also tends to drive up local rents and reduce vacancies.”


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