Servicers prepare for increased foreclosure activity

According to’s 2022 Seller Insights Report, 9 in 10 mortgage servicers disposing of distressed properties on the platform expect the size of foreclosure auctions to increase in the next 12 months. increase. Of those servicers, 74% of him said they expect a small increase, and 15% of him in this share expect a significant increase.

CEO Jason Allnut said: of “Most of the default servicing industry expects foreclosures to gradually increase over the next year, but expects a higher proportion of delinquent mortgages to avoid foreclosures than the historical average prior to the pandemic. “

According to the Consumer Financial Protection Bureau (CFPB), since the pandemic began, the number of borrowers delinquent on their mortgages has risen to levels not seen since the Great Recession in 2010.

Based on a survey of more than 50 customers of’s mortgage servicers and government-sponsored entities (GSEs), the report found that the bad mortgage backlog due to the pandemic was as high as the bad debt in 2015. It also shows what is expected to have the greatest impact on throughput. Beat regulatory intervention, recessions, home equity and interest rates. Respondents to the survey predict that government-backed mortgages and properties located in the Midwest are most likely to see an increase in foreclosures.

To help struggling renters stay home during the pandemic, the government has offered American renters a series of protective measures. The Federal Housing Administration (FHA) issued Mortgage Letter 2021-15, Freddie Mac issued Bulletin 2021-23, and Fannie Mae updated Lender Letter 2021-02. All of these extended the moratorium on foreclosures until July 31, 2021.

On average, clients expect 23% of their severely delinquent (SDQ) inventory as of June 2022 to be auctioned for repossession within the next 12 months, while clients’ 20 % expect more than 30% of SDQ inventory to be resold. It will be put up for foreclosure auction within the next year. The expected SDQ to foreclosure roll rate is below the historical average of 27%. Surveyed customers estimate that, on average, 72% of his SDQ inventory will hold at least 10% of his stake as of June 2022.

Black Knight Inc.’s latest “first look” in its June 2022 Mortgage Monitor report examines delinquency and foreclosure rates across the country, and finds that the national delinquency rate rose to 2.84% in June and The downward trend that has materialized has come to an end. last few months. The delinquency rate was 2.75% in May, 2.80% in April, and 2.84% in March. Looking specifically at foreclosure openings, this indicator increased by 26.6% on a month-to-month basis in June, while year-on-year it increased by 440.91%. Start also had his highest rate of major delinquency since March 2020 (4%), but less than half the rate in the years leading up to the pandemic.

ATTOM’s Mid-2022 US Foreclosure Market Report, which surveyed the first half of 2022, found that a total of 164,581 foreclosure applications (default notices, scheduled auctions, or bank remands) were reported nationwide, up year-on-year. increased by 153% in the same period two years ago.

Rick Sharga, EVP of Market Intelligence at ATTOM, said: “While overall foreclosure activity remains well below historical averages, the dramatic increase in foreclosure initiations suggests a return to normal levels may be possible by early 2023.”

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