It’s taken nine years, but the number of U.S. homes in foreclosure has fallen to a level not seen since before the 2008 housing crisis.
More troubled borrowers are making their way through the foreclosure process, which can take more than five years on average in some states. The number of properties in active foreclosure declined by 24,000 to 631,000 in March, according to Black Knight Financial Services. That’s the lowest since October 2007. Neighborhoods across the country were in the coming years flooded with more than 2 million notices from banks.
The wave of foreclosures crested in 2010 when banks seized a record 1.2 million properties and served even more with notices of default, auction or repossession. People suffering from the worst economic crisis since the Great Depression just “mailed their keys to the banks and just said ‘take it’,” said Ben Graboske, a chief technology officer at Black Knight.
The huge inventory of foreclosures has taken years for lenders and borrowers to work through. “We are finally getting back to a very clean slate,” Graboske said.
With incomes slowly rising and unemployment claims the lowest since the 1970s, more borrowers are staying current with their payments. Delinquencies on home loans across the country fell to 4.08 percent in March, the lowest since March 2007, according to Black Knight.
The most recent data suggests that the country has put its crisis-era foreclosures behind it, said Christopher Sullivan, chief investment officer of United Nations Federal Credit Union. Housing markets nationwide have been marked by an uneven recovery, but the pace of improvement has generally been positive, said Sullivan. In some cases home prices have appreciated so much that further increases may be “unwelcomed” as higher home values put off potential first-time home-shoppers, he said.
The reduction in late payments and foreclosures is allowing some of thecountry’s biggest banks to further cut resources at units that specialize inhandling delinquent borrowers.
Wells Fargo & Co., the largest U.S. mortgage lender, announced the elimination of about 250 positions last week as lenders scale back groups that deal with delinquencies, according to a person with knowledge of the matter, who asked not to be identified citing lack of authorization to speak publicly. The Charlotte Observer reported the job cuts last week.
Though the data suggests that the recovery is well under way, the country’s housing markets “still have a ways to go,” said Sam Khater, deputy chief economist at real estate data provider CoreLogic. While most foreclosure or distress metrics are the lowest in nine years, they are still above the late 1990s when the market was “last normal,” he said.