Pandemic May Have Halted Foreclosures But Delinquencies Still Rise

On Thursday ATTOM Data Solutions released their July 2020 Foreclosure Market Report and updated their local data on their RealtyTrac Web site. It’s no surprise that the data remains boring as hell. Because of the foreclosure moratorium imposed during the pandemic foreclosure activity ground to a halt starting in April so my graph below just basically bottomed out.
But all hell is sure to break loose once the moratorium ends at the end of August since we have near record unemployment and, according to CoreLogic, 7.3% of mortgages were delinquent in May compared to only 3.6% last year. Why CoreLogic is only now showing May data is beyond my comprehension but you can only imagine that it’s going to get worse from here on out. Nevertheless Rick Sharga, Executive Vice President at RealtyTrac, said that he doesn’t believe that we are going to see delinquency levels hit the highs of the Great Recession.

Chicago Foreclosure Activity
Chicago foreclosure activity has declined dramatically since the housing crisis. However, the recent plunge is the result of the moratorium placed on foreclosures in light of the Covid-19 crisis.

Black Knight actually has more up to date forbearance data as of August 10. They do show a slight decline recently but, still, 7.4% of all mortgages are in forbearance. Note that forbearance is not the same thing as delinquent although the percentages are the same. I believe that delinquent means you are in trouble on your mortgage whereas forbearance means you temporarily have the lender’s permission to be late.
mortgage forbearance
The number of mortgages in forbearance are gradually declining but they are still markedly higher than the beginning of the year.

Chicago Shadow Inventory

As I’ve been saying it’s really strange that the number of Chicago homes in foreclosure continues to decline despite the inability of the servicers to complete foreclosures. During July we had another 378 unit decline, which is the biggest drop in 6 months. I guess it’s possible that foreclosed homeowners are able to redeem their homes out of the foreclosure process? In this environment? Seems highly unlikely though. On the other hand it could be short sales that are clearing the shadow inventory I guess.

Chicago homes in foreclosure
The number of homes in foreclosure in Chicago continues to decline during the pandemic

#Foreclosures #ChicagoForeclosures
Gary Lucido is the President of Lucid Realty, the Chicago area’s full service real estate brokerage that offers home buyer rebates and discount commissions. If you want to keep up to date on the Chicago real estate market or get an insider’s view of the seamy underbelly of the real estate industry you can Subscribe to Getting Real by Email using the form below. Please be sure to verify your email address when you receive the verification notice.

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