Record FHA Delinquencies While Foreclosure Spigot Is Off

ATTOM Data Solutions released their August 2020 Foreclosure Market Report on Thursday in addition to updating their RealtyTrac data. It doesn’t really tell us much because there is still a moratorium on foreclosure filings but in the interest of completeness I provide the historical graph below of Chicago foreclosure activity. You can plainly see that the spigot has essentially been turned off – and it will likely remain turned off through the end of the year.

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.

But, as I pointed out last month, the real story is in the delinquency rate, which has been boosted by the forbearance program. Black Knight tracks this in their Mortgage Monitor Report and it improved slightly in July to 6.91%. However, once the foreclosure moratorium and forbearance program ends we are likely to see foreclosure actions on these delinquent mortgages.
Black Knight Mortgage Delinquency Rate
Mortgage delinquencies are trending downward after hitting an ugly peak a couple of months ago

One other side note. The Mortgage Bankers Association reported that the FHA delinquency rate hit a record high of 15.65%. Now think about it. These tend to be lower income folks who are more likely to have lost their jobs because of the nature of their work. So you can see what’s going on here.

Chicago Shadow Inventory

Somehow a few foreclosures are still taking place and the pipeline of homes in foreclosure is still managing to draw down a little bit each month. We saw another decline of 177 units in August to a record low since I’ve been tracking the data.

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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