Foreclosures and distressed mortgage volume came in higher from a year ago after recent servicing policy changes, while prepayments also accelerated last month despite ongoing volatility.
Although still low historically, foreclosure filings, including starts, inventory and sales, all ended up higher on an annual basis for the second month in a row in April, according to the latest ICE Mortgage Technology First Look report.
Foreclosed property sales saw the most transactions in over a year, hitting a 15-month peak, with approximately 6,500 recorded in April. The number rose 6.4% from the prior month’s 6,400. Sales were also up 9.4% year over year. Properties originally financed by Department of Veterans Affairs-guaranteed loans were behind much of the recent surge, after a federal moratorium on distressed mortgages expired at the end of 2024 without a loss-mitigation replacement plan in place, ICE reported.
New foreclosure starts pulled back from March, but were also up 13% compared to April 2024 to approximately 29,000. Total pre-sale inventory sat at 209,000 units at the end of the month, making up 0.38% of the housing market.
Although new loss-mitigation legislation for VA borrowers is currently making its way through Congress, some consumer advocates recently called for stronger measures to stem veteran foreclosures.
Why mortgage prepayments surged last month
As volatility marked interest rates during the month with markets digesting various Trump tariff announcements, mortgage prepayment speeds still managed to surge in April. Transactions accounted for 0.71% of total loan volume, as the rate finished at its highest since October last year and increased from 59 basis points one month prior.
April activity grew 19% from March and 34.9% from the same period in 2024 and were associated with higher refinance volume, the First Look report said. During the month, the 30-year fixed interest rate ranged from a low of 6.62% in the first half to 6.83%, falling off in the final weeks. More recently, debt negotiations have pushed mortgage rates higher, likely suppressing prepayment activity in May and June.
Mortgage delinquency rate in April ticks up
Overall, the national delinquency rate edged up to 3.22%, rising from 3.21% in March. Mortgages delinquent by 30 days or more but yet to reach the foreclosure stage grew to 1.75 million, with numbers up by 8,000 from the previous month and 94,000 a year ago.
Loans in later stages of distress of 90 days or more also increased to 476,000, higher by 59,000 compared to April last year. April delinquencies rose on a year-over-year basis by 10% or more for six consecutive months, but the total pulled back by 18,000 from March as borrowers became current or began the foreclosure process.
The Southern U.S. led the nation in the percentage of non-current loans, taking the top tree spots. Louisiana came in with a share of 7.6%, followed by Mississippi and Alabama at 7.4% and 5.5%, respectively.
Meanwhile, Florida, which was hard hit by multiple hurricanes in the summer and fall of 2024, saw the fastest growth in non-current share, 12.1% higher compared to April last year.
