Expected Foreclosure Spike Hits, But Activity Remains Low

Foreclosure Home For Sale Sign in Front of Large House

© Feverpitched - iStock/Getty Images Plus

Foreclosures are rising now that pandemic-led moratoriums have mostly been lifted. Foreclosure filings in September jumped by 24% from August and are up 102% compared to a year ago, according to an Oct. 15 ATTOM Data Solutions report. Because of the pause in foreclosures amid the pandemic, those percentages still reflect very low numbers.

More housing inventory will appear due to mortgage forbearance programs winding down, says Lawrence Yun, chief economist of the National Association of REALTORS®. The current mortgage default rate of at least three months is 3.5% compared to less than 1% prior to the pandemic.

“However, foreclosures have been at historic lows so far due to the forbearance support,” Yun says. “The default rate will certainly fall as long as the economy continues to generate jobs, but the end of the federal support program inevitably means some homeowners will need to sell.”

The states with the highest foreclosure rates in the third quarter are Nevada, Illinois, Delaware, New Jersey, and Florida, according to ATTOM Data Solutions. By metro area, the areas with the highest foreclosure rates in the third quarter were:

  • Atlantic City, N.J.
  • Peoria, Ill.
  • Bakersfield, Calif.
  • Cleveland
  • Las Vegas

The top U.S. ZIP codes with the highest foreclosure rates in the third quarter were:

  1. 66101 – Kansas City, Kan. (one in every 80 housing units received a foreclosure filing)
  2. 61605 – Peoria, Ill. (one in every 98)
  3. 44108 – Cleveland (one in every 122)
  4. 66104 – Kansas City, Kan. (one in every 122)
  5. 93222 – Frazier Park, Calif. (one in every 174)
  6. 61603 – Peoria, Ill. (one in every 191)
  7. 60484 – University Park, Ill. (one in every 193)
  8. 13605 – Adams, N.Y. (one in every 194)
  9. 60417 – Crete, Ill. (one in every 197)
  10. 44112 – Cleveland (one in every 201)
A bar chart showing the top 10 U.S. zip codes with the highest rates of foreclosure in Q3 2021