Interventions drive foreclosures to artificially lower levels
Foreclosures have fallen precipitously because of the CARES Act, which paused foreclosures on the federally backed mortgages that make up the majority of home mortgages in the country, as well as various state and local actions preventing foreclosures.
A report from ATTOM Data Solutions, which owns a foreclosure listings portal, found only 27,000 foreclosure filings were posted in the third quarter, down from the pre-COVID quarterly average of 279,000.
“Foreclosure activity has, for all intents and purposes, ground to a halt due to moratoria put in place by the federal, state and local governments and the mortgage forbearance program initiated by the CARES Act,” said Rick Sharga, executive vice president of ATTOM’s foreclosure listings portal, Realty Trac. “But it’s important to remember that the numbers we’re seeing today are artificially low, even as the number of seriously delinquent loans continues to increase, and that we’ll see a significant — and probably quite sudden — burst of foreclosure activity once these various government programs expire.”
Texas, which does not have state or local bans on foreclosures, saw foreclosures fall by a smaller percentage than the nation did: a 75 percent year-overyear decrease, compared to an 81 percent year-over-year decrease. However, ATTOM’s data, which measured default notices, scheduled auctions and bank repossessions, did not take into account canceled auctions. In Harris County, thousands of properties that have been scheduled for auction have not been foreclosed upon because the auctions have been repeatedly canceled due to social distancing concerns.
One Texas metropolitan area, McAllen, ranked first out of the 220 regions analyzed in the report for foreclosure rates. There, one in 1,134 housing units had a foreclosure filing in the third
quarter.
Data on howmany homes have fallen more than three months behind on their mortgages hint at the size of the burst of foreclosure activity expect in 2021, when fed
eral protections are currently set to end.
In July, nearly 4 percent of all mortgages were more than three months behind on their payments but not yet in foreclosure, according to real estate data company CoreLogic. That’s four times the rate of the same month a year before. In the Houston re
gion, the percentage was even higher: 5.4 percent of all mortgages were more than three months behind on their payments but not currently in foreclosure.
While many will work out repayment plans when federal protections come to an end, experts predict a portion, still floundering under the economic impacts of the pandemic, will be unable to do so.
“With industries like oil and gas projected to leave millions of jobs unrestored throughout the remainder of the year, wemay expect to see continued increases in mortgage delinquencies,” wrote CoreLogic in its report.