Summary5 min read

WSJ Your Money Briefing: "Foreclosure Activity Falls to a 12-Year Low"

Host: Charlie Turner (The Wall Street Journal)
Guest: Darren Blomquist, Senior Vice President at Attom Data Solutions
Date: January 29, 2018

Episode Overview

In this episode, host Charlie Turner discusses the sharp decline in U.S. home foreclosure activity with Darren Blomquist of Attom Data Solutions. The conversation unpacks the latest year-end foreclosure market report, explains the factors driving these historic lows, and highlights notable exceptions and regional variations in foreclosure trends.

Key Discussion Points and Insights

What Counts as a Foreclosure Filing?

Foreclosure filings include:
- Initial notice of default: When homeowners fall behind on mortgage payments.
- Scheduled foreclosure auctions: The public sale stage.
- Completed foreclosures (REO): When banks or investors take possession after auction.
Quote [01:15]
"All three of those are lumped up in foreclosure activity. And overall nationwide that combined activity was down to a 12 year low. So really firmly back into pre recession territory when it comes to these foreclosure numbers."
— Darren Blomquist

National Foreclosure Trends

2017 filings: ~676,500 U.S. properties.
Comparative drop: Down 76% from the 2010 peak of 2.9 million.
Return to normalcy: Numbers have fallen to levels seen before the financial crisis.
Quote [02:13]
"We're down to under 700,000, down 76% and really, yeah, a fraction basically of what we were seeing at the peak of the crisis."
— Darren Blomquist

Seasonal and Temporary Fluctuations

December bump: Slight increase in completed foreclosures is typical, as banks prepare to list properties for the spring market.
Quote [02:37]
"We actually do see that many times in December as the banks finish up that foreclosure process in anticipation for turning around and listing those properties on the market in the spring selling season."
— Darren Blomquist

Reasons for the Decline in Foreclosures

Safer, well-underwritten loans: Post-crisis mortgages have tighter lending standards, with very low default rates.
Rising home prices: Low housing inventory and rising home values give delinquent owners more equity, making foreclosure less likely.
Quote [03:06]
"Really the fundamental reason for this low foreclosure activity is much less risky loans that have been originated over the past seven years... those loans are performing very well. Very few of them are going into default."
— Darren Blomquist
High cash sales: 28–29% of purchases are all-cash, meaning no risk of foreclosure for those buyers.
Quote [04:03]
"And of course, if you're buying with cash, you're not at risk for foreclosure at all."
— Darren Blomquist

Regional Outliers and Rising Foreclosure Starts

Notable increases: D.C., Oklahoma, and West Virginia experienced higher foreclosure starts—contrary to the national trend.
- D.C.: Delayed distress from previous crisis working through the system.
- Oklahoma & West Virginia: Linked to local economic weaknesses and job/income losses.
Quote [04:55]
"In D.C. we see a very prolonged foreclosure process causing a lot of delays. And what we believe there is delayed distress finally coming through from the last crisis. Places like Oklahoma and West Virginia probably are a little bit different. It may be tied to more economic weakness in those areas."
— Darren Blomquist

Legacy Foreclosures and State-Level Backlogs

New York & New Jersey: Foreclosure auctions and bank repossessions hit 11-year highs, largely due to clearing old (“legacy”) cases from the previous housing boom.
Progress amidst backlog: This clearance is gradually adding some inventory back to the market.
Quote [05:58]
"We're seeing... those foreclosure auctions in New York, many of them tied to loans that got into trouble several years ago... And in some ways I see this as good news for those markets because there's finally some closure, some signs that there's progress being made in that backlog of delayed foreclosures."
— Darren Blomquist
Definition:
Quote [07:12]
"Yes, I would call these legacy foreclosures. A very high percentage in both New York and New Jersey and D.C. are tied to loans that were originated during the last housing boom, 2004 to 2008."
— Darren Blomquist

Highest Foreclosure Rates by Region

States: New Jersey (#1), Delaware (#2), Maryland (#3)
Metros: Atlantic City (#1) and Trenton (#2) in New Jersey; Philadelphia (#3) (which includes parts of NJ)
Quote [07:40]
"Where we saw the highest foreclosure rates by state was New Jersey was number one, followed by Delaware and Maryland. Two and three there. At the metro level, two New Jersey markets, Atlantic City and Trenton, were number one and two for top foreclosure rates."
— Darren Blomquist

Memorable Moments & Quotes

Comparing current levels to crisis peak:
[02:13] "We're down to under 700,000, down 76% and really, yeah, a fraction basically of what we were seeing at the peak of the crisis."
— Darren Blomquist
Describing legacy foreclosures:
[07:12] "A very high percentage in both New York and New Jersey and D.C. are tied to loans that were originated during the last housing boom, 2004 to 2008. Well over 50% in those states account for the total foreclosure volume there."
— Darren Blomquist
Biggest state-level issue:
[07:40] "Where we saw the highest foreclosure rates by state was New Jersey was number one, followed by Delaware and Maryland."
— Darren Blomquist

Timestamps for Key Segments

[01:15] — Explaining foreclosure filings
[02:05] — 2017 foreclosure stats and historical comparison
[03:06] — Fundamental reasons for the drop
[04:55] — Outlier states with increased foreclosure starts
[05:47] — New York and New Jersey inventory backlogs
[07:12] — Defining “legacy foreclosures”
[07:40] — Top states and regions for foreclosure rates

Summary

This episode of "Your Money Briefing" offers a concise breakdown of why U.S. foreclosure activity hit a 12-year low in 2017, drawing a sharp contrast with the aftermath of the financial crisis. The conversation provides valuable context about the shift toward safer lending, the impact of rising home values, the significance of lingering legacy cases in certain states, and identifies the regions still facing higher foreclosure rates. This is a comprehensive snapshot for anyone interested in the health and trajectory of the U.S. housing market.

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Transcript25 lines

[00:00]
A
This podcast is brought to you by relioQuest. Cybercriminals are constantly attacking. They want your data. They want your identity. They want your innovation. RelioQuest fortifies your business with agentic defense AI that detects, contains and eliminates cyber threats in minutes. It helps your security team move faster at the work that matters most to protect the business now and delivers insights to help them predict what's next. ReliaQuest agentic defense for the enterprise. Learn more at reliaquest.com that's R E L I A Q U E-S-T.com
[00:34]
B
this
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A
Is yous Money Matters from the Wall Street Journal.
[00:39]
B
Welcome to youo Money Matters. I'm Charlie Turner in New York. Home foreclosure activity fell to the lowest level in 12 years during 2017. That's according to Adam Data Solutions, which recently issued its year end 2017 US foreclosure market report. Foreclosure filings were reported on about 676,500 US properties. Joining us is Darren Bloemquist, who's senior vice president at Adam Data Solutions. First of all, Darren, we should say that foreclosure filings is a rather broad term. What do foreclosure filings include?
[01:15]
C
Those include those. Foreclosure filings include the initial notice of default that a homeowner gets when they are delinquent on their home. And then we also look at scheduled foreclosure auctions, kind of the second stage of the foreclosure process where that property is actually going to a public foreclosure auction to go to the highest bidder. And then lastly, we track the actual completed foreclosures, also known as REOs. And in many cases what happens at the foreclosure auction is the bank ends up taking back the property or in some cases an investor comes and bids and buys the property at the foreclosure auction. So all three of those are lumped up in foreclosure activity. And overall nationwide that combined activity was down to a 12 year low. So really firmly back into pre recession territory when it comes to these foreclosure numbers.
[02:06]
B
Right. We're talking about fewer than 700,000 filings and that's way down from a peak hit, I believe in 2010, right?
[02:14]
C
That's right. In 2010 we had 2.9 million of these properties. With foreclosure filings, we're down to under 700,000, down 76% and really, yeah, a fraction basically of what we were seeing at the peak of the crisis.
[02:31]
B
Now There was a little bump up in filings during December from the previous month, wasn't there? But is that relatively meaningless?
[02:37]
C
Yes, at this point. And it was primarily with the completed foreclosures in December. And that was nothing really out of the ordinary. We actually do see that many times in December as the banks finish up that foreclosure process in anticipation for turning around and listing those properties on the market in the spring selling season.
[03:01]
B
Darren, what's driving the drop in foreclosure activity? Is it a lack of housing supply?
[03:06]
C
Well, that's part of the equation, but really the fundamental reason for this low foreclosure activity is much less risky. Loans that have been originated over the past seven years, really since 2010 and 2009 even, you could argue. And those loans are performing very well. Very few of them are going into default. And so there's just not a lot of foreclosure activity. They're very low risk loans. Now, part of the reason that those loans are low risk is just they were originated well and underwritten well. But then another part that's helping them perform well is the market is continuing to go up and that is tied to the low inventory home price that's pushing home prices further and further up. So if someone does get into trouble on their mortgage, they have a lot of cushion in terms of home equity, typically to work with to avoid foreclosure.
[03:56]
B
What you're saying is obviously well taken, but if there are few houses, there's obviously going to be less supply to foreclose on.
[04:03]
C
Well, yes, that's right too. But there are homes being purchased. You know, the latest data, existing home sales, it's not going up quickly, but we are at the highest level since 2006, so gradually getting higher and higher. So homes are being sold, but part of it is the loans are better. Part of it is we do see still a higher percentage of cash sales than we did during the last housing boom, around 28 to 29% cash sales. And of course, if you're buying with cash, you're not at risk for foreclosure at all.
[04:35]
B
I'm speaking with Darren Blomquist of Adam Data Solutions, and you're listening to your Money Matters from the Wall Street Journal. Thanks for listening, everyone. Darren, there were a few outliers in this report. Adam also said that foreclosure starts were at a record low in the US Last year, but they were up in a few states and up fairly sharply, I think.
[04:55]
C
Yeah, there were a few states where we saw that increase One of them, which is not really a state, but the District of Columbia did see an increase, a sharp increase in foreclosure starts. Another couple that stand out are Oklahoma and West Virginia. But certainly those were the exceptions to the rule. In D.C. we see a very prolonged foreclosure process causing a lot of delays. And what we believe there is delayed distress finally coming through from the last crisis. Places like Oklahoma and West Virginia probably are a little bit different. It may be tied to more economic weakness in those areas. And that historically has been the main reason for foreclosures is if someone loses their job or loses income, they are more at risk for foreclosure. And that I think is what we are seeing in those two states and maybe a few other areas as well.
[05:47]
B
Also a couple of other items here. Foreclosure auctions in New York rose to an 11 year high, counter to a big drop nationwide. New Jersey bank repossessions also at an 11 year high.
[05:59]
C
Yes, and both of those are somewhat similar to D.C. where we're seeing, when we dig into that data, those foreclosure auctions in New York are, are many of them tied to loans that got into trouble several years ago. But because of several factors in New York, it's taken them longer to actually get through the process. And we're seeing those move through and actually be scheduled for foreclosure auction. So that's definitely a counter. And then similar in New Jersey, the process is just a little more further along in New Jersey in moving that bulk of backlogged foreclosures through the process. We did see that 19% increase also to an 11 year high and that final stage of foreclosure there. And in some ways I see this as good news for those markets because there's finally some closure, some signs that there's progress being made in that backlog of delayed foreclosures, which is part of the inventory equation as well. I mean, in those states at least you have, it's not a huge amount, but there is some inventory locked up in foreclosure that's been locked up for years, that once the foreclosure is complete, that property is going to go on the market and be available for sale.
[07:09]
B
Are we talking about legacy foreclosures or is that a different subject?
[07:13]
C
Yes, I would call these legacy foreclosures. A very high percentage in both New York and New Jersey and D.C. are tied to loans that were originated during the last housing boom, 2004 to 2008. Well over 50% in those states account for the total foreclosure volume there.
[07:32]
B
What areas, Darren, do we find some of the highest foreclosure rates for 2017, either metro areas or states statewide?
[07:41]
C
Where we saw the highest foreclosure rates by state was New Jersey was number one, followed by Delaware and Maryland. Two and three there. At the metro level, two New Jersey markets, Atlantic City and Trenton, were number one and two for top foreclosure rates. And then Philadelphia was number three. There were. And some of that, you know, a lot of that part of the Philadelphia metro area is in New Jersey. So those three are all really somewhat tied to the issues that we're seeing in New Jersey there.
[08:08]
B
Darren Blomquist, Senior Vice President at Atom Data Solutions. Darren, thanks for joining us.
[08:13]
C
Thanks for having me.
[08:14]
B
Like this podcast. Be sure to rate and review us on Apple Podcasts and that's yous Money Matters. Thanks for listening. I'm Charlie Turner at the News Desk in New York.
[08:25]
A
The Future of Everything Podcast from the Wall. Another new episode is coming soon. This podcast is brought to you by reliaQuest. Cybercriminals are constantly attacking. They want your data. They want your identity. They want your innovation. ReliaQuest fortifies your business with agentic defense AI that detects, contains and eliminates cyber threats in minutes. It helps your security team move faster at the work that matters most to protect the business now and and delivers insights to help them predict what's next. ReliaQuest agentic defense for the enterprise learn more at reliaquest.com that's R E L I A Q U E-S-T dot com.