‘A Frightening increase.’ Foreclosure actions are up more than 150%. what could this mean to the housing market?

There has been a huge increase in foreclosure filings in the first half of 2022, but the reasons may surprise you!

The number of foreclosure actions taken (when the lender takes the first public foreclosure action) is up a staggering 220% since the start of 2022. This according to real estate data analytics firm ATTOM Data Solutions’ midyear 2022 U.S. foreclosure market report. What is also concerning, are the number of properties that had foreclosure filings (this number includes foreclosure starts) are up 153% from the same time period last year. 

Foreclosure rates are highest in the states of Illinois, New Jersey and Ohio. The number of foreclosure starts is highest in the states of California (highest on the list), followed by Florida, Tennessee, Illinois and Ohio.

“Foreclosure activity across the United States continued its slow, steady climb back to pre-pandemic levels in the first half of 2022,” stated Rick Sharga, executive vice president of market intelligence at ATTOM. “While overall foreclosure activity is still running significantly below historic averages, the dramatic increase in foreclosure starts suggests that we may be back to normal levels by sometime in early 2023,” says Sharga.

What does this increase in foreclosure actions mean for the housing market?

Foreclosures are rising up due to a combination of perform storms. The most influential sector are the mortgage that were already in foreclosure prior to the 2020 pandemic. These already delinquent homeowners simply stayed in their homes for 2+ years without the threat of foreclosure due to the federal mandate and foreclosure moratorium. These severely delinquent mortgages are now the first to be foreclosed upon.

Indeed, “it’s important to note that many of the foreclosure starts we’re seeing today — in fact, much of the overall foreclosure activity we’re seeing right now is on loans that were either already in foreclosure or were more than 120 days delinquent prior to the pandemic,” says Sharga. Indeed, many of these loans were protected by the foreclosure moratorium put in place by the government during the pandemic — therefore just halting the inevitable by a couple of years. Greg McBride, chief financial analyst at Bankrate says, “Foreclosure activity is returning to normal levels after being artificially depressed by pandemic-induced payment relief programs and extended foreclosure moratoriums. In a historical context, foreclosures are still very low.”

In addition, As the various foreclosure moratoriums (that kept families safe in their homes during the worst of the pandemic’s economic disruptions) have now ended. Plus the rising interest rate not allowing others to refinance to lower rates.

“Much like the sharp turnaround in housing inventory that we’ve observed in the number of for-sale homes recently, when the market has tilted in one direction very extremely, we see huge percentage increases when the trends shift back in a different direction, even though in many aspects what we’re witnessing is just a return to something resembling what was once normal,” explains Danielle Hale, chief economist at Realtor.com.

One thing is for certain. The foreclosure actions are only beginning. There are still hundreds of thousands of foreclosure actions on mortgages delinquent prior to the pandemic. There are still hundreds of thousands of homeowners still either on, or coming off of Covid forbearance plans. Most of these homeowners are 2+ years delinquent. and our team of advocates at Homeowner Protection Alliance have been receiving calls this year with distressed homeowners unable to figure out a remedy to avoid foreclosure.

Homeowners who were told by their lenders in 2020 they could stop paying their mortgage and all would be resolved after the pandemic, are discovering a very dark and troubling trend. The lender or the foreclosure attorneys representing the lender giving them difficult ultimatums. Either cure the past due, or foreclosure actions will commence.

If you are a homeowner who is in foreclosure, or about to be in foreclosure, or past due on payments do NOT procrastinate or delay. Do not wait for your mortgage company to suddenly have empathy and sympathy for you. Give us a call today. Homeowner Protection Alliance is the nation’s highest rated homeowner assistance group. We have protected over 10 thousand families.