It was August 2020, six months into a global pandemic, when I laid out what I thought at the time was a compelling case against a wave of foreclosures similar to the one that the nation experienced during the Great Recession.
A year later, and with the benefit of 20/20 hindsight, I’m more convinced than ever that when government borrower protections finally do expire, we’ll see a relatively soft landing when it comes to foreclosures. Let’s review some of the factors we looked at a year ago and see how they played out.
Massive unemployment didn’t lead to massive defaults
Over 22 million jobs were lost due to the COVID-19 pandemic. Unemployment rates rose virtually overnight from 3.5% — the lowest level in 50 years — to almost 15%. Normally, job losses like this would have led immediately to loan delinquency, defaults, and foreclosures, but that didn’t happen this time. Why not?