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The States With the Highest Foreclosure Rates

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U.S. foreclosure activity declined in September, reaching the lowest number of properties with a foreclosure filing since July 2006: 106,866. That’s down 9% from August and down 19% from last September, according to the monthly RealtyTrac foreclosure report, marking the 48th consecutive month of year-over-year declines in the foreclosure rate.

September was also the final month of the third quarter. Compared to the second quarter, foreclosure activity didn’t change much — a 0.42% increase overall — and there was a slight uptick (2%) in properties that received default notices. The year-over-year shifts were much more significant: a 16% drop in foreclosure activity, 11% decline in default notices and 38% drop in repossessed property.

For distressed property owners, foreclosure has continued to be an extremely long process. Properties foreclosed on in the third quarter were in the process for an average of 615 days, which is a 7% increase from the second quarter and a 13% increase from last year. It’s the highest average since RealtyTrac started reporting the statistic in 2007.

Foreclosure is not only a stressful experience on its own, it also seriously damages the homeowner’s credit scores, meaning they have to work extremely hard on other aspects of their finances to rebuild their credit after the massive hit. (You can track your scores for free on Credit.com.)

On that note, many homeowners have a long road ahead. More than half of states are reporting an increase in scheduled foreclosure auctions from last quarter: Nationwide, scheduled foreclosure auctions increased 7% from the second quarter and declined just 1% from the third quarter 2013. Plenty of states are still working through a high volume of defaulted home loans, and 10 states plus the District of Columbia reported an increase of foreclosure activity from last year.

Here are the 10 states with the highest foreclosure rates in September.

10. South Carolina

One out of every 1,069 homes with a mortgage in South Carolina had a foreclosure filing in September. (The national average was one in every 1,232.) It may have a high foreclosure rate, but the state’s foreclosures have followed the national downward trend, with a 22% decline in the foreclosure rate from last September.

9. Delaware

Only 387 homes in the state of Delaware had a foreclosure filing last month, but that’s a lot for a small state. It works out to one in every 1,049 properties in some phase of foreclosure, a 14% decline from last year.

8. Ohio

The foreclosure rate in Ohio declined 31% from last year, but it’s still in the top 10 with one in every 1,020 properties in foreclosure.

7. Indiana

Though it’s No. 7 in the September rankings, Indiana’s quarterly foreclosure rate put it at a slightly better ninth place in the third quarter. One in every 983 units was in foreclosure last month, a 24% decline from last year.

6. Connecticut

Connecticut is the only state with one of the 10 highest foreclosure rates in September to not have a top-10 quarterly foreclosure rate (it’s 11th). This is likely tied to the 7% increase in foreclosures from August, even though its one in 924 rate is a 27% improvement from last September.

5. Nevada

Nevada reported one of the best improvements in its foreclosure rates from August and last September: 34% and 69% drops in foreclosure activity, respectively. Still the state was hit hard by the mortgage crisis, and one in every 797 properties is in foreclosure.

4. Illinois

Foreclosure takes a painfully long time in Illinois, with the average foreclosure proceedings taking 889 days in the state. That slow flow still led to a 33% decline in foreclosure filings since last year, but there was a 7% increase from August. One in every 789 properties in Illinois is in foreclosure.

3. Maryland

For the third quarter, foreclosure rates were up slightly in Maryland, but activity dropped in September. One in every 673 properties has a foreclosure filing, down 21% from August and 16% from last year.

2. New Jersey

New Jersey has the unfortunate distinction of not only having a very high foreclosure rate but also having the longest foreclosure process: it takes an average of 1,064 days to complete, RealtyTrac says. In September, the foreclosure rate spiked 8% from the previous month and 29% from last year. One in every 511 New Jersey properties is in foreclosure.

1. Florida

Florida’s foreclosure rate improved slightly — down 6% from last year and 8% from August — but the number of distressed properties in that state is astounding. One in every 434 homes is in foreclosure, and it takes an average of 951 days to complete the process.

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Image: Frank Lombardi Jr

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