The prospect of a foreclosure crisis, which had many observers worried in the summer before the federal government lifted an 18-month moratorium, seems less and less likely by the day as a new report from ATTOM Data Solutions shows foreclosures continuing to decline.
A modest 3% decrease in new foreclosures last month and a 5% drop in total properties in the foreclosure process are great signs for the market as a whole, according to Rick Sharga, executive vice president of ATTOM subsidiary RealtyTrac, with borrowers seemingly able to overcome financial hardship or take advantage of other government-sponsored programs following the moratorium sunsetting in September.
“After an initial surge following the end of the government’s moratorium, it appears that foreclosure activity may be slowing down as we move towards the end of the year,” said Sharga in a statement. “Despite concerns about a pandemic-driven wave of defaults, mortgage delinquency rates and foreclosure starts have continued to decline due to government and industry programs, and a recovering U.S. economy.”
Several states that saw spikes in foreclosures a few months ago experienced precipitous drops in new foreclosures this month, including North Carolina (down 46%); New Jersey (down 31%); Washington (down 28%); Tennessee (down 28%); and Nevada (down 22%).
Sharga sounded even more confident that the country as a whole would avoid major foreclosure issues, as November marks the first monthly decrease in foreclosure metrics after only a modest increase last month.
“The fact that foreclosure starts declined despite hundreds of thousands of borrowers exiting the CARES Act mortgage forbearance program over the last few months is very encouraging,” Sharga noted.
Completed foreclosures, or real estate owned (REO) properties dropped even further in November, down 24% overall. Though some pundits had imagined the end of forbearance would look like the 2006-2008 housing crash with thousands of properties sitting empty, sold at public auction or sitting empty, Sharga said this crisis simply hasn’t materialized in the numbers.
“ suggests that the ‘forbearance equals foreclosure’ narrative was incorrect, and that the efforts of the government and the mortgage servicing industry have prevented potentially millions of unnecessary foreclosures from happening due to COVID-19,” he added.
Lenders repossessed a total of 2,292 properties in November, according to the report. Illinois, California, Florida, Pennsylvania and Michigan had the most repossessed properties, all with 130 or more.
For more information, visit https://www.attomdata.com/.