Foreclosure filings are up 132% year-over-year.Here’s what this means

What does the recent rise in foreclosures mean for the current housing market?

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As I read through this month’s real estate data, three statistics caught my eye. First, the number of foreclosures (where the foreclosure process was started on a severely delinquent loan but not yet completed and liquidated) in March surpassed his 7,000, up year-over-year for the first time. . According to Black Knight, a provider of mortgage technology, data and analytics, it’s been on the rise in about a decade. Then, in the first quarter of 2022, he had more than 78,000 US properties foreclosed, according to real estate analytics firm ATTOM. This was up 39% from the previous quarter and up 132% from the year-ago quarter. And third, according to Black Knight, serious mortgage delinquency (90+ days past due) is 70% higher than pre-pandemic.

These numbers look grim, but experts say the reality isn’t as bad as it seems. While active foreclosures have increased year-on-year, the number of loans in active foreclosures remains well below historical standards. 40,000 foreclosures were initiated. However, the foreclosure moratorium introduced as part of the CARES Act in response to COVID-19 has halted all of its normal activities. And foreclosure initiations continue to be low in most cases because the vast majority of people who were on foreclosures got out of such schemes and went back to paying off their mortgages. is entitled to protection against foreclosure until the maximum permissible foreclosure period is reached.

Regarding foreclosure filings, Rick Sharga, Executive Vice President of Market Intelligence at ATTOM, said: Mortgage servicers are essentially “catch-up” processing foreclosures on loans that were already in default or over 120 days past due before the pandemic. Many of these loans are quite old, having been issued before 2009. ’” He also added: … despite a dramatic increase [first quarter] Foreclosure activity is running at about 50% of normal levels. ”

And finally, severe mortgage delinquencies, which have risen since the pandemic, fell 12% in March, the biggest one-month improvement in 20 years. In fact, he has more than 1.2 million fewer serious delinquencies than in March last year. Black Knight reports. Additionally, delinquency rates are significantly lower across the board. Black Knight reports that 30 days in arrears (borrowers with just one overdue payment) has seen him plummet 20% since February. What is the reason for this decrease? A combination of job growth, student loan deferrals, strong performance after the moratorium, and millions of refinancings are helping to put downward pressure on the delinquency rate.

Why are foreclosures and delinquencies important to the housing market?

We monitor foreclosures and delinquency as they are often distressing signs that may indicate weakness in the housing market. Given that delinquencies have been declining for several months, experts suggest that even a modest increase since the beginning of the year should be nothing to worry about. Bankrate analyst Jeff Ostrowski said: The housing market needs all kinds of new inventory, but Ostrowski said he doubts the amount of foreclosures will be enough to really affect inventory tightness. “I don’t think there will be any real impact from increased foreclosures as foreclosures are at very low levels and legal proceedings can take months,” he says.

What does this mean for home buyers and sellers?

Proponents say we shouldn’t expect changes in the housing market as a result of these increased foreclosures. “The demand for housing is so much higher than the supply that no one will be foreclosed on if they steal. and mortgage expert Holden Lewis.

However, you may come across a foreclosed property when searching for a home. If you’re looking to buy a home, you’ll want to understand the different types of foreclosures that are offered for sale. “Many real estate investors are looking for foreclosure bargains, but it’s still a seller’s market,” says Lawrence Yuen, chief economist at the National Association of Realtors.

Depending on the stages of the delinquency process, you may find an advance foreclosure where the lender notifies the homeowner that they are in default. A short sale in which a homeowner attempts to sell a home for less than its mortgage value due to financial difficulties. There are sheriff sale auctions where defaulted properties are sold in court, bank foreclosures known as real estate owned (REO) properties, and government foreclosures where properties are purchased with loans from the Federal Housing Finance Agency or the Veterans Affairs Administration. I have.

Foreclosed properties can be found on Multiple Listing Services (MLS), so there’s no need to go undercover. Anyone can see it. “Foreclosed properties are also advertised in newspapers, banks and websites. For buyers considering foreclosed properties, auctions are another place to find available homes,” he said. says Ratiu.

That said, serious delinquencies can be devastating for homeowners. Because it can take a toll on their credit score and lead to defaults and foreclosures, he says Ostrowski. The silver lining is that with prices holding firm, struggling homeowners should be able to sell their homes before they lose their homes, but those same homeowners will have to survive in an expensive rental market. .

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