Rising foreclosures signal growth in Texas, Florida loss mitigation

Residential loan servicers and asset managers are facing a sharp rise in defaulted properties across the Sun Belt, as new data from Attom shows foreclosure filings jumping over 10% year-over-year in July. The distress is heavily concentrated in Texas and Florida, which led the nation in both new foreclosure starts and completed bank repossessions, creating an immediate need for lenders to expand regional default servicing capabilities and deploy targeted loss mitigation strategies to manage mounting credit risk.   

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Foreclosures overall jumped higher in July, maintaining their consistent upward trend this year, although current activity points to a return to historical norms overall, according to Attom.

Foreclosure notices, comprising new starts, scheduled auctions and completed bank repossessions, jumped 10.4% from a year ago, the real estate data platform said in its latest report. Compared to June numbers, foreclosures increased by approximately 1%.

“The increase in foreclosure starts and completed foreclosures compared to last year shows that financial pressures remain a factor for some homeowners,” said Attom CEO Rob Barber in a press release.

The latest total represents 39,906 properties or one in every 3,603 housing units in the U.S. A year ago, foreclosures totaled 36,128, equal to one in 3,939 homes. The rate also worsened from one in 3,656 in June.

New lender foreclosure notices appeared on 26,648 homes in July, up 9.6% year over year from 24,302. The number also rose 1.6% from one month earlier, with the uptick reversing a drop in June when starts declined to 26,217.

Meanwhile, completed real estate-owned foreclosures came in at 4,764 units, near level with June’s 4,773. Completions were up 23.2% from a year ago when they landed at 3,866.

Although foreclosure activity may raise some red flags for the lending community, it remains relatively stable when compared to historical benchmarks, Barber said.

“While annual increases have become more common, current volumes indicate that the market remains relatively resilient overall.”

Recent month-to-month foreclosure numbers could be a promising sign of improved homeowner finances when taken into account with newly published delinquency data. Both Intercontinental Exchange and the Mortgage Bankers Association this month found easing of early-stage delinquencies over the spring and summer, but like Attom, they reported still-elevated stress when compared to a year ago.

Where the trouble spots are

Nevada performed the worst among U.S. states with a foreclosure rate of one in every 1,703 units last month. Two Southeastern states followed, with South Carolina posting notices on one in every 2,085 properties and Florida at one in 2,232. 

New foreclosure notices popped up most frequently in Texas, with the Lone Star State reporting 3,306 July starts. Just behind was Florida at 3,277 filings. The nation’s most populous state, California, had the third-highest number with 2,540. 

Texas also led the nation in completed REO repossessions last month, as banks took over ownership of 1,265 foreclosed residential properties. California was a distant second at 616 units, with North Carolina reporting 299.

The Texas cities of Houston and Dallas recorded the most foreclosure completions of large metropolitan areas with 405 and 223, respectively.