Mortgage foreclosure activity dropped to all-time low in 2021, ATTOM report finds
What homeowners can do if they are struggling to make payments
Mortgage foreclosure activity fell to a new all-time low in 2021 as the government stepped in to help homeowners, according to a new report from ATTOM Data Solutions.
According to the company’s Year-End 2021 U.S. Foreclosure Market Report, the drop to 151,153 properties is down 29% from 2020 and down 95% from the peak of 2.9 million properties in 2010. Last year’s decrease fell to the lowest level since ATTOM began tracking in 2005.
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Foreclosure ‘tsunami’ unlikely, expert says
Despite experts' predictions of a foreclosure surge following the COVID-19 pandemic, according to UrbanWire, one expert in particular says that isn't likely.
"The COVID-19 foreclosure tsunami that some people had anticipated is clearly not happening," said Rick Sharga, executive vice president at RealtyTrac, an ATTOM company. "Government and mortgage industry efforts have prevented millions of unnecessary foreclosures, and while it’s likely that we’ll see a slight increase in the first quarter, we probably won’t see foreclosure activity back to normal levels before the end of 2022."
The Consumer Financial Protection Bureau (CFPB) previously placed a freeze on most evictions through the end of 2021, effectively pausing foreclosure proceedings. Forbearance programs from the Federal Housing Finance Agency (FHFA) also helped some homeowners with loans backed by Fannie Mae and Freddie Mac to avoid foreclosure. But now, as the eviction freeze ends, foreclosure activity could increase slightly.
"The government’s foreclosure moratorium, the mortgage forbearance program and the mortgage servicing guidelines enacted by the CFPB in August have kept foreclosure starts artificially low over the past year," Sharga said. "While the recovering economy should prevent a huge increase in defaults, we should see a gradual increase in foreclosure activity as these programs expire, and servicers exhaust all loan modification options for delinquent borrowers."
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3 options for homeowners to help avoid foreclosure
Struggling homeowners still have many options available to help them avoid foreclosure, even after the end of the eviction freeze. Consider the following options if you are struggling to make your payments:
Enter into forbearance
Homeowners with loans backed by Fannie Mae and Freddie Mac can enter into a forbearance plan if they have been affected by COVID-19 in the form of reduced pay, shutdowns or other financial hardship. Homeowners can call their servicer and tell them how they have been affected to enter this forbearance.
After exiting your forbearance, several options are available to help fulfill missed payments. This includes paying it back in one payment, increasing monthly payments or even adding to the payments to the end of the loan. Homeowners who have been affected by COVID-19 or another natural disaster should contact their lenders and servicers to discuss their options.
Refinance the mortgage
Refinancing could save homeowners hundreds of dollars on their monthly payments without having to enter forbearance. Black Knight data shows 1.3 million borrowers could save $400 per month or more on their monthly payments. Visit Credible to compare your refinance options and see how much you could save.
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Sell the house
In today’s hot housing market, borrowers who can’t afford their payments can still sell their home for a profit amid rising home equity, rather than lose it to foreclosure.
"We believe that repossessions will continue to be lower than normal throughout 2022," Sharga said. "Homeowners have a record amount of equity – over $23 trillion – and over 87% of homeowners in foreclosure have positive equity. This means that most borrowers will have an opportunity to sell their house at a profit rather than lose everything to a foreclosure auction."
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