Is Foreclosure Activity on Steep Incline?

National Association of Realtors came out with this news clip Monday the 19th, and I added my two cents in!

It’s extremely important that the public understand the differences in today’s housing market and mortgage climate and the 2008 Housing and mortgage crash. It’s also important not to read into this too deeply. Some housing analysts have grown concerned about what will happen to the real estate market when temporary foreclosure moratoriums are lifted. Will it spark a wave of new foreclosures and lead to a crisis?

Already, foreclosure activity is on the rise, even though the moratoriums are still in place and the government has relaxed requirements for mortgage forbearance due to the COVID-19 pandemic. Foreclosure filings in March rose 5% compared to the previous month, according to ATTOM Data Solution, a real estate analytics firm.

But that slight uptick could be a good thing, analysts note. “The foreclosure moratorium on government-backed loans has virtually stopped foreclosure activity over the past year,” says Rick Sharga, executive vice president of RealtyTrac, an ATTOM Data Solutions company. “But mortgage services have been able to begin foreclosure action on vacant and abandoned properties, which benefits neighborhoods and communities. It’s likely that these foreclosures are causing the slight uptick we’ve seen over the past few months.”

I personally agree with this analysis, as long as mortgage interest rates continue to stay low, and there are some predictions it may dip even lower in 2022, I don’t see a surge in Foreclosures and Short Sales like we experienced in the 2008 crash. The 2008 crash, was an accumulative actions that was predicted. Unqualified buyers receiving mortgages on stated income, foreign investors purchasing investment properties on stated income. Mortgage fraud, unethical appraisers, all were formulas for a crash. In today’s market none of this is practiced. It’s especially noted that Fannie Mae and Freddie Mac are introducing (forbearance, new deferral repayment option programs for up to 18 months.) Lenders do not what the homes they hold mortgages on come back to them. The cost of foreclosure, short sales or similar means is non productive and extremely expensive for these lenders and home owners need to understand this.

Homeowners with federally backed loans could receive up to 18 months of forbearance, but those who received such assistance at the beginning of the pandemic could see those protections lift after September. The Consumer Financial Protection Bureau estimates that could put about 1.7 million homeowners at risk of losing their homes. “There is a tidal wave of distressed homeowners who will need help,” CFPB Acting Director Dave Uejo said in a recent statement.

Marina Walsh

But high home prices and growing homeowner equity likely will prevent another foreclosure crisis, housing experts say. Also, a historic housing shortage will keep demand for homes high. For homeowners who are unable to make their house payment, they could sell—potentially for a high profit. “We can’t have indefinite forbearance, and we can’t have an infinite foreclosure moratorium,” Marina Walsh, vice president of industry analysis at the Mortgage Bankers Association, told®. “As things get back to some sense of normal, people have to move on.”

Marina has a great point, for anyone with circumstances that may hinder their future ownership, their opportunities are looking very good. The ability to sell for a high profit, or the opportunity to refinance at a lower interest rate, are likely choices best suited for folks in danger of these events. The threat of media hype, to introduce a panic and promote a potential crisis is very unlikely.

However, the percentage of homeowners who are seriously behind on their mortgage payments or in foreclosure was 245% higher in February than a year earlier, according to data from Black Knight. The states with the highest foreclosure rates are Delaware, Illinois, “Florida, specifically Vero Beach and Sebring.” Indiana, and Ohio, according to ATTOM Data Solutions. On the metro level, the areas with the highest foreclosure rates are Lake Havasu City, Ariz.; Provo, Utah; McAllen, Texas; Shreveport, La.; and Atlantic City, N.J.

I was surprised at first to see any foreclosure crisis in Florida, however knowing Sebring and Vero Beach I personally can believe this is possible.