Foreclosure Inventory Plummets to Eight-Year Low

As a further sign of housing metrics returning to their “normal” levels, the percentage of residential homes in the foreclosure process took tumbled down to their lowest level in eight years, according to Black Knight Financial Services’ First Look at Mortgage Data for October 2015 released on Monday.

At the end of October, approximately 721,000 residential homes across the country were in the process of foreclosure, which was a decline of 16,000 month-over-month (2.3 percent) and 191,000 year-over-year (21 percent), according to Black Knight. It is the lowest rate for foreclosure inventory since December 2007, immediately prior to the onset of the housing crisis. The 721,000 homes in foreclosure represent about 1.43 percent of all residential mortgage loans in the country.

Foreclosure starts, which have been up and down all year, dropped to 73,200—a decline of 8.4 percent from September to October and by 11.3 percent from October 2014 to October 2015. The news was also good for the delinquency rate, defined as the number of loans 30 days or more past due but not in foreclosure. The delinquency rate dropped by nearly 2 percent over the month and by 12 percent year-over-year in October down to 4.77 percent, covering about 2.4 million mortgage loans.

When figuring in the mortgage loans that are in pre-sale foreclosure inventory, that number increased to 3.1 million, which is still down by over half a million (507,000) from the previous October, according to Black Knight.

Serious delinquencies—properties 90 days or more overdue but not in foreclosure—fell down to 820,000 in October, a decline of 3,000 from September and from nearly a quarter of a million (249,000) from October 2014.

Prepayment activity, which has historically been a good indicator of refinance activity, was at 1.09 percent in October, up slightly by 1.14 percent over the month and by 9.85 percent over the year.