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I N D U S T R Y I N S I G H T / D A R E N B L O M Q U I S T
Foreclosure auction inflow data points to a third
wave of post-recession distress building in late
2019 and early 2020. A total of 43,232 residential
properties nationwide were referred to Auction.com
in Q3 2019 for a potential future foreclosure auction,
up from the previous quarter and a year ago to the highest level
since Q1 2017.
e increase in inflow foreshadows an
increase in completed foreclosures in the next
six months, according to an analysis of historical
inflow data. at analysis shows that more than
half of foreclosure auction inflow eventually
completes the foreclosure process—either
through sale to a third-party buyer at the
foreclosure auction or by reverting back to the
foreclosing lender at the foreclosure auction.
Of the inflow that eventually completes the
foreclosure process, the vast majority (96%) does
so within six months of the inflow date.
POST-RECESSION DISTRESS PATTERNS
e characteristics of the increasing
foreclosure auction inflow are distinct enough to
label it a third wave of distress emerging in the
wake of the Great Recession.
e first and largest wave comprised
primarily risky loans originated during the
2004-2008 housing boom. A high percentage
of these loans went bad in the subsequent
Government-insured and private portfolio
loans are driving trends in the default landscape.
