Real Estate

Private firms are now buying foreclosures in record numbers

Lone Star and Goldman subsidiary make huge gains

Foreclosures in the first six months of 2017 plummeted 20% from last year, according to the Midyear 2017 U.S. Foreclosure Market Report from ATTOM Data Solutions, a multi-sourced property database.

And according to the release from ATTOM: "While overall foreclosure activity is down, there is a noticeable trend up in loans being foreclosed by two firms that have been very active in buying up non-performing loans from government agencies and the big banks over the past few years: giant private equity firm Lone Star Funds (under the moniker of LSF9), and Goldman Sachs (under subsidiary MTGLQ)."

The first six months of the year saw a total of 428,400 foreclosure filings, including default notices, scheduled auctions or bank repossessions, a decrease of 20% from the same period last year and 28% from two years ago.

“With a few local market exceptions, foreclosures have become the unicorns of the housing market: hard to find but highly sought after,” ATTOM Senior Vice President Daren Blomquist said. “More than 38% of properties sold at foreclosure auction in the first half of this year went to third-party buyers rather than back to the bank, the highest share we’ve ever seen going back as far as 2000, the earliest this data is available.”

Third-party buyers bought 38.3% of all properties lost to foreclosure at a public foreclosure auction, up from 26.9% last year, marking a new high.

However, counter to this downward trend, eight states saw an uptick in foreclosure activity from last year. Foreclosure activity increased the most in Mississippi which was up 11%, followed by Louisiana’s increase of 5%, Connecticut’s 3% and New Jersey’s 2%.

“Although foreclosures are fading overall, there has been a notable an uptick in foreclosures completed by some nonbank entities, counter to the sharp downward foreclosure trend among big banks and government-backed loans,” Blomquist said. “These divergent foreclosure trends are likely the result of the big banks and government agencies selling off distressed loans over the past few years to nonbank entities that are now foreclosing on an increasing volume of that deferred distress.”

While there were more than 400,000 foreclosure filings during the first six months, only 203,875 properties started the foreclosure process during that same time frame, down 20% from last year and the lowest six-month total since the second half of 2005.

 

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