One legacy of the housing boom and bust has been an increase in the number of homes in foreclosure for late payment, or already foreclosed and subsequently owned by banks. According to two data sources, foreclosure trends in district states are generally more positive than in the nation as a whole, though banks own a large number of homes in Michigan and Minnesota.
When a bank completes the foreclosure process and takes back the home, it then becomes known as a “real estate owned” (or REO) property on the bank’s balance sheet. The bank will then attempt to sell the home. In early August, the Federal Housing Finance Agency released data on the number and locations of REO properties for sale in July. They showed that REOs (on a per capita basis) fluctuated fairly widely in district states.
Michigan and Minnesota, for example, both had REO rates significantly higher than the national average (see table). In Michigan’s case, the high rate is likely the fallout from a particularly poor state economy, and for Minnesota, a robust housing market in the Twin Cities leading up to the recession. Other district states came in considerably lower than the national REO average.
However, the foreclosure pipeline leading to REOs has better news for district states. For government-sponsored mortgages in the United States, there are 35 homes per 10,000 residents that are at least 90 days late in payments or are in the foreclosure process, according to Lender Processing Services Inc., a provider of mortgage information. Every district state beat that rate with a little room to spare—even Michigan, where 31 homes per 10,000 were in trouble (see table). On both housing measures, the Dakotas had rates that were a small fraction of the national rate.