Mortgage Defaults and Foreclosures Are Surging in Key Markets: What Investors Need to Know

Foreclosures are way up. According to HousingWire, they rose 14% year over year in May, while analytics and data site ATTOM reports a 26% jump in the first quarter compared to last year. That’s not a blip or a temporary correction but enough of a jump for investors to take note and strategize around it. States Differ Markedly Despite the knee-jerk reaction to proclaim an impending 2008-style financial crash, the first thing to note is that the rise in foreclosures is markedly different from state to state. ATTOM notes that the states most affected by the rise in defaults are Florida, South Carolina, Maryland, Nevada, and Indiana. The Wall Street Journal points out that bad loans to unqualified buyers are not a primary driver of the spike but rather rapidly rising insurance and property tax costs. That’s a crucial difference because lending practices can be tightened with requirements for higher credit scores and increased down payments, but lowering insurance costs and property taxes is not as easily accomplished, which could hint at more foreclosures to come. “Payment Shocks From Taxes and Insurance” “They’re having payment shocks from taxes and insurance…along with potential job ...