Foreclosure filings were up 20 percent in February compared with a year earlier, according to the latest report by ATTOM, as a growing number of U.S. homeowners faced default notices, scheduled auctions or bank repossessions as a result of their struggles to keep up with mortgage payments.
Nationally, one in every 3,701 housing units had a foreclosure filing last month.
“Foreclosure activity in February marked the twelfth consecutive month of annual increases, extending a gradual upward trend that began early last year,” Rob Barber, CEO at ATTOM, said in the report. “While filings dipped slightly from January, both foreclosure starts and completed foreclosures remain higher than a year ago. Even with the continued rise, overall foreclosure levels remain well below historic norms.”
Which States Reported the Worst Foreclosure Rates?
Indiana had the worst foreclosure rate in the nation, with one in every 1,597 housing units with a foreclosure filing.
South Carolina followed with one in every 2,217 housing units having a foreclosure filing, while Florida was third with one in every 2,277 housing units. Next came Delaware (one in every 2,443 housing units); Illinois (one in every 2,590 housing units); Ohio (1 in every 2,787 housing units); New Jersey (1 in every 2,798); Nevada (1 in every 2,915); Utah (1 in every 2,984); and Texas (1 in every 3,156).
Two of these states also reported the first and second-highest number of foreclosure starts, namely Texas (3,390 foreclosure starts) and Florida (3,250 foreclosure starts).
These numbers indicate when lenders initiated the foreclosure process after a homeowner defaulted on their mortgage, something that usually happens after 120 days of missed payments.
California came third with 2,440 foreclosure starts in February, followed by Georgia (1,331 foreclosure starts) and Indiana (1,197 foreclosure starts).
On the other hand, West Virginia had the lowest foreclosure rate in the nation, at just 1 in every 43,066 housing units, followed by Vermont (1 in every 33,904) and South Dakota (1 in every 23,830).
Why Are Foreclosure Rates on the Rise?
While the annual increase in foreclosure rates was reported nationwide, the worst-affected states were in the Midwest and the South.
Many of these have seen drastic housing price corrections in recent years—especially states like Florida, where homes can now only be sold at a much lower price than they might have been bought for at the height of the pandemic.
“Anyone who bought during that time paid higher prices versus what those properties can be sold for now, and if they have a mortgage, not much has been able to be paid down on the loan balance within the last three years,” Cara Ameer, real estate broker at Coldwell Banker Vanguard Realty in Florida, told Realtor.com.
Homeowners in Florida have also been burdened by homeowner association (HOA) fees, which have risen after new building safety legislation came into force, and rising homeowner insurance premiums. For many, these expenses have combined to make it difficult for them to get to the end of the month and continue paying their mortgages.
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