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"One Major Threat to Housing Recovery Recedes"

Shadow inventory—or pre-foreclosures—have dropped by more than a third since August of 2013, Lenders Processing Services reports in the “first look” data from its August Mortgage Monitor. Shadow inventories have now fallen to its lowest point in four-and-a-half years.

Shadow inventory was once deemed a big threat to derailing the housing recovery, but that threat has been vanishing. The shadow inventory now represents 2.66 percent of all homes with a mortgage in the country, compared to 4.04 percent a year ago. 

The current rate of mortgages that are 30 days or more delinquent but are not yet in foreclosure was at 6.20 percent in August, a decline of nearly 10 percent since August 2012, LPS reports.

As of July, following states have the highest percentage of non-current loans (yet all significantly lower percentages than last year):

  • Florida: 16% (down 24.1% year-over-year)
  • Mississippi: 15% (-10.9%)
  • New Jersey: 14.9% (-6.6%)
  • New York: 12.7% (-4.4%)
  • Maine: 12% (-4.7%)

Meanwhile, these states have the lowest percentage of non-current loans: 

  • North Dakota: 3.1% (down 15.7% year-over-year)
  • South Dakota 4.1% (-11.8%)
  • Alaska: 4.4% (-13.3%)
  • Wyoming: 4.4% (-8.4%)
  • Montana: 4.5% (-16.6%)