Foreclosure Inventory Rate (the share of mortgages in some stage of the foreclosure process): 0.3%, unchanged from January 2023. Transition Rate (the share of mortgages that transitioned from current to 30 days past due): 0.6%, unchanged from January 2023.
By loan type over the previous quarter, the total delinquency rate for conventional loans decreased 1 basis point to 2.63 percent. The FHA delinquency rate decreased 14 basis points to 10.46 percent, and the VA delinquency rate decreased 5 basis points to 4.58 percent.
Share of U.S. loans in foreclosure processes 2000-2024, by quarter. In the second quarter of 2024, the share of mortgage loans in the foreclosure process in the U.S. decreased slightly to 0.43 percent.
States that had the greatest number of REOs in October 2024, included: California (306 REOs); Illinois (252 REOs); Texas (249 REOs); New York (212 REOs); and Florida (140 REOs).
The Takeaway
Of all 50 states, California had the most foreclosure filings (3,975), and Vermont had the least (11). As for the states with the highest foreclosure rates, Illinois, Connecticut, and New Jersey took the top three spots, respectively.
Despite Blackstone's hope for stabilization, a 117% rise in foreclosures since March 2023 signals distress. March 2024 hit a 9-year high, with CA, NY, and FL leading. While CRE faces uncertainty, single-family housing remains resilient, offering a silver lining.
Foreclosure starts increase nationwide
States that had 100 or more foreclosures starts in Q1 2024 and saw the greatest quarterly increase included, New Hampshire (up 43 percent); Illinois (up 26 percent); Florida (up 22 percent); Rhode Island (up 21 percent); and Nevada (up 16 percent).
The Great Recession that started in 2008 brought a housing crisis in which over six million American households lost their homes to foreclosure.
Similarly, states along the Pacific Coast—where home values skyrocketed during the pandemic—have some of the lowest rates of free-and-clear homeownership among the working-age population. California (22.7%), Washington (22.8%), and Oregon (22.9%) sit at 45th, 44th, and 43rd out of all 50 states, respectively.
In other words, if your monthly gross income is $10,000 or $120,000 annually, your mortgage payment should be $2,800 or less. Lenders usually require housing expenses plus long-term debt to less than or equal to 33% or 36% of monthly gross income.
Delinquency Rate: As of September 30, 2024, FHA's serious delinquency rate – those mortgages where the borrower is 90 or more days behind on their mortgage payment – remained consistent with pre-pandemic levels at 4.15 percent.
At the opposite end of the spectrum, the West Coast has the lowest share of mortgages more than 30 days delinquent, with Washington, Oregon, and California all reporting rates of delinquent mortgages under 1.5%.
There is strong evidence to suggest that negative equity, meaning that an owner owes more on their loans than the house is worth, is the leading cause of foreclosure. As lenders rarely loan more on a property than it is worth, this primarily occurs after a significant decline in prices.
More homes on the market in 2025 may create better opportunities for buyers. Higher inventory means fewer bidding wars, which may keep home prices more stable. Falling mortgage rates could also ease the cost of buying a home, though it may take time.
Foreclosure rate U.S. 2005-2023
In 2023, the share of housing units with a foreclosure filing increased but remained below the long-term historical average. Approximately 0.26 percent of properties were in foreclosure in that year.
What State Has the Most Foreclosures in Terms of Numbers? States with the largest number of foreclosures in the third quarter of 2024 included California (10,448), Florida (10,216), Illinois (6,006), New York (5,334), and Texas (6,484).
The report also stated that in July 2024, out of the 224 metropolitan statistical areas with populations of at least 200,000, Provo-Orem, UT had the highest foreclosure rates (one per 940 housing units), followed by Macon, GA (one per 1,167), Spartanburg, SC (one per 1,895), Columbia, SC (one per 1,587), and Atlantic ...
Foreclosed properties are typically sold by lenders or banks at discounted rates to recover their losses swiftly. As a result, buyers may find themselves acquiring a property at a significantly reduced cost compared to its market value.
Who Suffers the Most in Foreclosure? Homeowners suffer the most in foreclosure because they lose the home that they live in as well as take a huge financial loss due to the foreclosure.
Banks almost always negotiate on the bids they receive – they rarely accept them on the first go-around. They'll review the bids and take the highest offers, negotiating with buyers to get the dollar amount they want for the home.
A growing percentage of American homeowners have no mortgage on their property. According to the U.S. Census Bureau, nearly 40% of homes in the country were mortgage-free last year.
Although foreclosures are rising, they remain well below the levels recorded during the 2008 financial crisis. But the problem could soon get worse as high home prices, mortgage rates and property taxes bite Americans.
Many homes in foreclosure have been poorly maintained, They may also have structural issues or water or mold damage; some may be in violation of codes or other standards. Vandalism can also be an issue, with thieves or the prior owners sometimes taking fixtures, appliances, windows, or anything else of value.