MortgagePolitics & Money

Foreclosures down in April as moratorium continues

Year-over-year decrease currently at 17%

The number of properties with foreclosure filings hit 11,810 in April, down 1% month over month and 17% year over year, according to a recent study from RealtyTrac and ATTOM Data Solutions.

May marks the 14th month of the federal government’s foreclosure and eviction moratorium.

States with the highest April foreclosure rates were Delaware (one in every 5,700 housing units with a foreclosure filing), Nevada (one in every 5,738), Illinois (one in every 5,890), Florida (one in every 6,375), and New Jersey (one in every 6,390). Metro areas with a population larger than 1 million with the highest foreclosure rates were Cleveland, Ohio (one in every 3,550), Las Vegas (one in every 4,838), Riverside, California (one in every 5,020), Jacksonville, Florida (one in every 5,243), and Chicago (one in every 5,324).

States with at least 100 April foreclosure starts that saw the greatest monthly increase in starts included Washington (up 76%), New York (up 53%), Kentucky (up 47%), Alabama (up 28%), and Indiana (up 26%).

Rick Sharga, RealtyTrac executive vice president, said most of today’s foreclosure activity is made up of vacant and abandoned properties, or commercial loans — which often don’t have the same protections as loans on residential properties.

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“With the federal government’s foreclosure and eviction moratorium, coupled with the CARES Act mortgage forbearance program, the government and mortgage servicing industry have worked together exceptionally well to prevent millions of unnecessary foreclosures,” Sharga said. “Because of these programs, and the nearly 90% success rate of borrowers resuming mortgage payments as they exit forbearance, a large influx of foreclosures when the programs expire seems very, very unlikely.”

The Consumer Financial Protection Bureau (CFPB) released a notice of proposed rulemaking in early April that would amend Regulation X to provide a special pre-foreclosure review period prohibiting servicers from starting foreclosures until after December 31, 2021. Under current CFPB foreclosure rules, a borrower must be 120 days delinquent before the foreclosure process can start.

The Bureau said that nearly 2.1 million households in forbearance are past the 90-day delinquent mark and said it is concerned that those homeowners may be transferred immediately in to the foreclosure process once their forbearance period expires.

According to the Bureau, while many protections of the CARES Act only apply to federally backed mortgages, the Bureau is looking to set a blanket standard across the industry so that all homeowners would have similar protections regardless of who the owner or servicer of the loan is. The CFPB said it will also cover the private mortgage sector that currently makes up 30% of the market.

“The nation has endured more than a year of a deadly pandemic and a punishing economic crisis. We must not lose sight of the dangers so many consumers still face,” said CFPB Acting Director Dave Uejio. “Millions of families are at risk of losing their homes to foreclosure in the coming months, even as the country opens back up.

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