ATTOM released its August 2022 U.S. Foreclosure Market Report today with news that could make client conversations a touch more awkward than usual, especially if you’re not prepared with the data and insights supplied here. 

The data shows a total of 34,501 U.S. properties with foreclosure filings—including default notices, bank repossessions, or scheduled auctions—a 14% increase from the previous month and up 118% from August 2021. 

Lenders started the foreclosure process on 23,952 properties the same month—12% more than the previous month and 187% more than a year ago. 

How is this likely to affect you and your clients? 

Foreclosure starts from 2019 to the present

Rick Sharga, the Executive Vice President of Market Intelligence at ATTOM, provides some much-needed context for these numbers. 

Two years after the onset of the COVID-19 pandemic, and after massive government intervention and mortgage industry efforts to prevent defaults, foreclosure starts have almost returned to 2019 levels. August foreclosure starts were at 86 percent of the number of foreclosure starts in August 2019, but it’s important to remember that even then, foreclosure activity was relatively low compared to historical averages.

Rick Sharga

Executive Vice President of Market Intelligence at ATTOM

Some states saw bigger increases in foreclosure starts than others. The five listed below had at least 100 foreclosure starts in August 2022 and saw the biggest monthly increases. 

  • Oklahoma (up 80%) 
  • Tennessee (up 74%)
  • Virginia (up 64%)
  • Arkansas (up 53%)
  • Washington (up 50%)

The following five counties had the greatest number of foreclosure starts in August 2022: 

  • Cook County, IL (798 foreclosure starts)
  • Los Angeles County, CA (740)
  • Harris County, TX (465)
  • Suffolk County, NY (297)
  • Riverside County, CA (280)

Areas with the highest foreclosure rates

On average, one in every 4,072 housing units nationwide had a foreclosure filing in August 2022. The five states listed below had the highest foreclosure rates: 

  • Illinois (one in every 1,926 housing units)
  • Delaware (one in every 2,387)
  • South Carolina (one in every 2,417)
  • New Jersey (one in every 2,441)
  • Florida (one in every 2,950)

Among the 223 major metro areas with populations of at least 200,000, the following five had the highest foreclosure rates in August 2022: 

  • Peoria, IL (one in every 869 housing units)
  • Jacksonville, NC (one in every 968)
  • Bakersfield, CA (one in every 1,454)
  • South Bend, IN (one in every 1,478)
  • Rockford, IL (one in every 1,496)

And here are the top five metros with populations over one million:

  • Cleveland, OH (one in every 1,820 housing units) 
  • Chicago, IL (one in every 1,877)
  • Jacksonville, FL (one in every 2,074)
  • Riverside, CA (one in every 2,091)
  • Orlando, FL (one in every 2,445)

Foreclosure completion rates increase 28%

Lenders repossessed a total of 3,938 U.S. housing units through completed foreclosures (REOs) — 28% more than last month and 59% more than a year ago. 

That said, according to Sharga, repossessions are likely to stay below pre-pandemic levels, mainly because over 90% of U.S. borrowers at risk of foreclosure have positive equity and would benefit from selling their homes. 

States with the highest number of completed foreclosures (REOs) included the following: 

  • Illinois (493 REOs)
  • New York (337)
  • Michigan (326)
  • Pennsylvania (260)
  • California (189)

Among metros with populations over one million, the following had the biggest monthly increases in REOs: 

  • Kansas City, MO (up 967%)
  • New York, NY (up 90%)
  • Philadelphia, PA (up 28%) 
  • Detroit, MI (up 23%)

Top takeaways for real estate agents

If you’re an agent in an area seeing higher than average foreclosure rates, keep this data on hand to help your clients see the larger picture and how this information affects them. 

Look for ways to help your past and present clients minimize the risk of foreclosure. 

Helping them understand the market and make sense of nerve-wracking headlines will make you stand out as someone they can trust to guide them through the process of buying or selling a home.